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UNITED STATES OF AMERICA. 



PRINCIPLES OF ECONOMICS 



THE SATISFACTION OF HUMAN 

WANTS 



IN SO FAR AS THEIR SATISFACTION DEPENDS ON 
MATERIAL RESOURCES 



GROVER PEASE OSBORNE 



CINCINNATI 

ROBERT CLARKE AND COMPANY 

i§93 




WASH 

363 



ttf 










Copyright 1890, 1S93. 

By Grover Pease Osborne. 

All Rights Reserved. 



PREFACE. 

I have long been of the opinion that, in the study of 
economic science, we can safely start with no nar- 
rower subject than the Satisfaction of Human Wants. 
To avoid a seeming trespass upon the realm of the 
spiritual, it is necessary to add the limiting qualifica- 
tion, so far as this satisfaction depends on material 
resources, or the labor of human beings. The objec- 
tion which naturally occurs to the reader is that this 
subject is too broad, and that it is necessary to take a 
single division of it; e. g., the science of wealth. But 
this is not a natural division, and, I am convinced, 
is too indefinite. For wealth, as defined by the 
writers who make it the subject of Political Economy, 
is simply that which has exchange value. Now, ex- 
change value is not solid ground. It depends on four 
things : the quality of the object, the quantity avail- 
able, the number of people who want it, and what 
they have to give for it. It is nothing but a relation 
between various elements. Water is wealth under 
some circumstances, and not under others. I believe 
that the only method which will give us certainty is 
one that goes back to the wants themselves, and to 
the resources for their satisfaction. Wants are real 
things ; the resources for their satisfaction are real. 

(1) 



2 PKEFACE. 

Those in different countries and different ages can be 
compared. The relations between wants and re- 
sources, and between the resources themselves, can 
be studied under value both in use and in exchange- 
No subject is large in outline, which is all that is 
proposed in the present work. It is something to 
properly define a subject, and state its natural divi- 
sions. Instead of wealth, we consider the resources 
which the world, or better a single nation, has for the 
satisfaction of the wants of its people ; next the num- 
ber of people and the wants to be satisfied. Who is to- 
own or control the various classes of these resources, 
and what are the reasons for such ownership ? Then 
we take up the methods by which the resources can be 
most economically used ; then the principles of their 
exchange between various owners ; and, last, the dis- 
tribution of such resources as are produced by modern 
methods, among the various interests which contribute 
to their production. 

The subject does not, after all, seem so much 
broader than that which political economists attempt 
to cover under the head of wealth, and it has the 
advantage of resting on firm ground ; we are more 
likely to see things as they are, and to put them in 
their right relations. The first object of this work is 
to present the subject in proper outline. The titles 
of the various books and chapters are intended to 
be an analysis of the subject,. 

The reader will perhaps be struck with the entire 
omission of all reference to the tariff question, and 
yet he will see that its treatment does not naturally 



PREFACE. 6 

belong to the subject. It is, of course, one of the 
many applications of the principles of exchange. But 
the applications of the principles of exchange, and of 
those of the other natural divisions of this treatise, are 
world-wide. I have been the more willing to omit 
such discussion in order to emphasize the fact that 
Political Economy is not the science of free trade or 
protection, as nine out of ten people suppose. Most 
persons who feel obliged to make some remark to a 
student of Political Economy will at once ask, "Are 
you in favor of free trade or protection ? " evidently 
supposing that there are but two kinds of political 
economists. I should not have hesitated, however, to 
discuss the tariff question had the plan of this treatise 
demanded it. 

It is not in every respect pleasant to be classed with 
a "school," because one 'may not wish to be held re- 
sponsible for all the views of those with whom he may 
agree in the main. Many persons suppose that if 
they know to which of three or four schools a writer 
belongs, they know all he has to say. I believe, how- 
ever, that most of the fundamental truths of economic 
science are to be found in what has been called " the 
orthodox English school," which includes so many 
eminent authors in England and the United States. 
I have sought to make an original investigation on 
what I believe to be the only true line of study ; but 
truths once discovered, whether by English or German 
writers, must be used by all who come after them. 

Attention is called to the outline of the subject as 
given in the titles of the various books and chapters ; 



4 PREFACE. 

to the Introduction, the first four chapters of Book I., 
the first and last chapters of Book II., and the first 
chapter of Book III. In Book IV. the reader will 
notice the emphasis put upon the continued employ- 
ment of labor, and the cost of labor to the laborer. 
The old and correct view of the distribution of the 
product between the three elements, " land, capital 
and labor," is recognized in Book VI., but the larger 
portion of the space is devoted to the further distribu- 
tion of the great share of economic labor among the 
classes of laborers whose interests are naturally op- 
posed, each to all the others. The reader will please 
notice the share of " good name," a very large share 
usually overlooked, and the distinction between the 
laborer who works for himself, the laborer who works 
for wages in production, and the laborer who satis- 
fies wants directly. The titles of the chapters under 
" Distribution " give the final shares. 

Some portions of this volume were published in. 
1890 and 1891. 

G. P. O. 

Cincinnati, July, 1893. 



CCWTE^TS. 

PAGE. 

Introduction— "Wants, • 9 



BOOK I. 

THE RESOURCES FOR THE SATISFACTION OF WANTS. 

Chapter I. The Resources of Nature, 21 

Permanent — Consumable. 

Chapter II. The Ability to Labor, . 32 

Satisfies wants Directly and Indirectly. 

Chapter III. The Productions of Human Industry, . 38 
Permanent or Consumable — Satisfy Wants 
Directly and Indirectly. 

Chapter IV. Society, 4 46 

Satisfies Wants Directly and Indirectly. 

Chapter V. Utility of the Resources, 49 

Chapter VI. Value in Use, ...... . . . 57 

BOOK II. 

POPULATION— THE NUMBER OF PEOPLE WHOSE 
WANTS ARE TO BE SATISFIED. 

Introduction — The Relation of Wants to Resources is 

Shown by Value in Use, 65 

Chapter I. Population and the Resources of Na- 
ture, ........... 66 

Chapter II. Population and Labor, ...... S7 

(5) 



6 



CONTENTS. 



Chapter III. Population and Produced Wealth, . 
Chapter IV. Population and Society, . , . . 
Chapter V. The Law of the Increase of Popula- 



PAGE. 

96 
103 



Chapter VI. 



Applications of the Law of the In- 
crease of Population, ..... 



116 



135 



BOOK III. 

OWNEESHIP AND CONTROL OF THE RESOURCES FOE 
THE SATISFACTION OF WANTS. 

Chapter I. Private Property or Socialism, . . . 15] 

Chapter II. The Ownership and Control of Labor, 160 

Chapter III. The Ownership and Control of the 

Resources of Nature, 165 

Chapter IV. The Ownership and Control of the 
Resources Produced by Human In- 
dustry, . • 181 

Chapter V. Control of Society, . 189 

Individualism and Socialism. 



BOOK IV. 

ECONOMICAL USE OF THE RESOURCES. 

Introduction, . 201 

Chapter I. The Economical Use of Labor, . ". 203 

Part I. The Constant Employment of Labor, • . . 203 

Part II. The Irksomeness of Labor, 209 

Part III. The Division of Labor, ....... 214 

Part IV. The Development of Labor Power, and the 

Prohibition of Certain Forms of Labor, 221 



CONTENTS. 7 

PAGE. 

Chapter II. Economical Use of the Eesources of 

Nature, 225 

Part I. Permanent Natural Eesources, 225 

Part II. Consumable Natural Eesources 231 

Part III. Public and Private Use of the Eesources of 

Nature, 234 

Chapter III. Economical Use of Produced Wealth, 242 

Chapter IV. The Use of the Eesource of Society, 252 

Chapter V. The Purposes for Which the Ee- 
sources Shall be Used, .... 256 



BOOK V. 

EXCHANGE. 

■Chapter I. How Exchange Satisfies Wants, . . 272 

Chapter II. The Price of a Dollar, .... 275 

Chapter III. Exchange Values, 280 

Chapter IV. The Limits of Values in Exchange 

are Fixed by Value in Use, . 285 

Chapter V. Supply and Demand, 289 

Chapter VI. Cost of Production, 296 

Chapter VII. Monopoly, 306 

■Chapter VIII. Money, ....„„ 312 

Part I. Qualities of a Good Money, 313 

Part II. What Determines the Value of Money ? 325 
Part III. Efforts to Secure a Money of Uniform 

Value 330 

Chapter IX. Substitutes for Money, 335 



CONTENTS. 



BOOK VI. 

DISTRIBUTION OF PRODUCED WEALTH. 

PAGE. 

Introduction. 

Chapter I. Rent — The Share of Those Who 
Have Possession of the Resour- 
ces of Nature, 355 

Chapter II. Interest — The Share of Produced 

Wealth, 363 

Chapter III. The Share of Good Name, .... 375 

Chapter IV. The Share of Monopoly, .... 382 

Chapter V. The Share of the Producer — Profits 

of Production, 397 

Chapter VI. The Share of the Merchant — Profits 

of Exchange, 406- 

Chapter VII. The Share of the Laborer Who 

Works for Himself, 411 

Chapter VIII. The Share of the Laborer Who 

Works for Wages, 420 

Chapter IX. The Share of Labor Which Satisfies 

Wants Directly, 43& 

Chapter X. The Booty of the Robber, and the 

Winnings of the Gambler, . . 441 

Chapter XL The Share of the Government, . . 445 



INTRODUCTION. 

Economy is the making the most of our resources. 
The man who gets as much out of an income of five 
thousand dollars a year as other men from an income 
of ten thousand, is an economist ; while he who lives 
on five hundred a year, and does not secure the com- 
forts and advantages which other men obtain for three 
hundred, is a spendthrift. Economy consists in using 
our resources to the best advantage, in making what 
we have go as far as possible. 

There are more opportunities for the exercise of 
economy in society or a nation than in the case of a 
single individual ; we have only to call to mind the 
difference between a civilized nation, such as the United 
States, and the state of barbarism in which the Indians 
dwelt, to see how much economy has done toward the 
promotion of material comfort. The difference is far 
greater than would at first appear ; because, under the 



10 INTRODUCTION. 

uneconomical methods of savage life, the entire terri- 
tory of the United States could support only a few 
hundred thousand people ; whereas, with such economies 
as are now employed, the same territory supports more 
than sixty millions. Even if the people, on the average, 
had no better living than the savages, the same territory 
maintains a hundred times as many people. Econom- 
ical methods result in the supporting of a larger 
population, quite as often as in giving a better living 
to the individual members of society. If the resources 
for the satisfaction of human wants were unlimited ; 
if there were all the food and clothing and dwellings 
and furniture which the world could possibly use ; and 
if these could all be renewed without effort — then there 
might be no need of the science of Economics. The 
fact that the world's resources are limited — that land 
is limited, that timber and minerals can not be had in 
a condition fit for use without great labor ; that man's 
power of labor is limited ; that there is not, at present, 
enough of material goods to give to every person in the 
world a comfortable living — makes it of the highest 
importance that we use the resources we have to the 
best advantage. 

Economy is the making the most of the resources of 
an individual, a community, or a nation. 

WANTS. 

The heaven of the Esquimau is said to be a happy 
island in a warmer climate, with great kettles of walrus 
meat, always boiling, beside which a good Esquimau 
may sit and eat, forever and forever. This is the Es- 



WANTS. 11 

quimau idea of happiness ; this is the sum of an Es- 
quimau's wants. The wants of a highly civilized man 
are a thousand times as great. 

There are some needs and desires which belong to 
man, as man, and which he has in common with the 
brutes. Air and food and water are necessary to life. 
There are other wants, such as the desire for personal 
adornment, which are universal, and as old as the his- 
tory of the race. Still other wants, such as those 
which distinguish the civilized man from the savage, 
have been developed by circumstances, or created by 
various influences. 

The Creation, Development and Suppression 
OP Wants. — The rudiments of most wants exist in the 
nature of man ; but they are modified and developed 
and new wants are created, by the circumstances in 
which individuals and nations are placed. The follow- 
ing influences have been at work in the development of 
the wants of civilized nations as we find them to-day : 

1. Physical surroundings. — Climate and the diffi- 
culty of obtaining food, the need of shelter, danger from 
wild beasts and savage men, nearness to the sea, the 
variety of efforts necessary to secure a livelihood — 
all these, and many other circumstances, have had much 
to do with the development of men and nations. 

2. Education, as it is given by man and nature. — 
The influence and teaching of the schools, the pulpit 
and the press, the home education of early life, and 
the influence of natural surroundings, go to form one's 
wants. Religious and moral teaching have had an enor- 
mous influence in moulding the wants of mankind. Mo- 



12 INTRODUCTION. 

hammedanism and Christianity have produced different 
types of nations. The difference between Protestant 
and Catholic countries must be explained, in part, by 
the influence of different forms of religion. 

3. The customs and opinions of society. — By so- 
ciety we mean the people with whom one lives and 
associates ; it may be the other members of an Indian 
tribe. Men like to do as others do ; they are influenced 
very greatly by what others think of them. Particular 
methods of living, which may have become established 
by accident, are adopted by children born into the tribe 
or society, or who come into it from another locality. 
Most boys who learn to chew tobacco, do so for no 
other reason than that it is the fashion of the boys or 
men with whom they associate. People follow many 
of the customs of society, simply because they are 
customs. 

4. Habit. — A habit is the result of continuing or 
repeating any act for a sufficient length of time, and 
it frequently creates a real want. It matters not how 
the habit is begun, whether by accident, a desire to con- 
form to the customs of society, or through the influence 
of education. When the habit, good or bad, is once 
formed, the wants of the man are, so far, changed. 

5. Satisfying wants or leaving them unsatisfied. — 
The mere fact of satisfying wants or of leaving them 
unsatisfied is one of the principal causes of their devel- 
opment, change in character, or complete suppression. 
Many wants, if regularly satisfied, tend to increase in 
strength. There are also many which if left unsatis 
fied will diminish in intensity ; and some will die out 



WANTS. 13 

entirely. The desire for works of art is strengthened 
by the study of art. The desire for knowledge is in- 
creased by its acquisition. If a person of very simple 
habits and tastes is suddenly furnished with the means 
of gratifying them, he will be surprised to see how fast 
his wants will grow. The direction of their growth may 
be determined by accident, but it is sure to influence 
his life for good or evil. On the other hand, if one 
has not the means of satisfying many of the wants 
the gratification of which is not necessary to life, he 
turns toward something else, and in a measure loses 
his old desires. 

Very close to this is the fact that the mere turning 
of attention to a particular want, and keeping the means 
of its satisfaction before one, will usually increase its 
intensity. Merchants and manufacturers know that 
they must create a demand for some lines of goods be- 
fore they can be sold. The vender of peanuts locates 
his stand on the street corner, where the odor of roast- 
ing will reach passers-by. The display of goods in 
shop windows, and most of the various kinds of adver- 
tising, are not so much to inform people where they 
can procure certain commodities, as to create a demand 
for them. Trade and manufacturers have as much to 
do with creating wants as with satisfying them ; and 
many wants which manuf acturers and merchants have 
created, die out when these men no longer stimulate 
them. The saloon-keeper not only satisfies, but creates, 
wants by an attractive display of his beverages. 

The withholding of the means for the satisfaction of 
wants, tends to keep them in abeyance ; but as soon as 



14 INTRODUCTION. 

one is able easily to satisfy the more common wants, a. 
great crop of others will spring up. It is easier to 
create wants than to suppress them. 

6. Inheritance. — A powerful factor in fixing the 
wants of a race is the law of inheritance. It has 
been said that to educate a man requires at least three 
generations. The character of the men of New Eng- 
land was determined, not so much by the rocks and 
the sea and the rugged cotmtry, as by the intellectual 
and moral character of their ancestors in old England. 
The gain or loss made in life is in a measure fixed, 
and transmitted from father to son. The nature of 
the wants of one generation is the most powerful fac- 
tor in determining the wants of the next. 

The historical study of the development of wants 
is an interesting subject by itself, but is not necessary 
to an understanding of the means of their satisfaction. 

Still more important to the moralist, are the various 
influences now at work forming the wants of the com- 
ing generations. The well-being of the race may be 
advanced, to the extent of all that lies between the 
highest civilization and the lowest barbarism, by the 
development or the suppression of the various wants of 
its members. What one wants, determines, to a great 
extent, what he is, and will become. It is, indeed, one 
of the claims of Christianity that it possesses supernat- 
ural power to modify and actually revolutionize the 
wants of its adherents. This is the highest claim that 
any system can make. Wants seek their satisf action,, 
and often find or make a way to it through seeming 
impossibilities. What a man thinks he wants, is,. 



WANTS. 15 

therefore, of the highest importance ; not only to him- 
self, but to those who live in society with him. No 
field of study can be more inviting to the practical 
philanthropist. The history of civilization is the his- 
tory of the development, the creation, and the sup- 
pression of human wants. 

Spiritual and Keligious Wants. — There are 
mental, spiritual and religious wants which can not be 
satisfied by material resources ; and, to that extent, 
they do not come under this enquiry. A happy state 
of mind may give one great comfort in life, even with 
very indifferent surroundings. It is one of the claims 
of Christianity, that its followers may receive spiritual 
help ; and that there are wants in the nature of man 
which only spiritual influences will satisfy. Our 
science has to do with satisfactions only to the extent 
that they depend on material resources. So far as a 
house of worship, an organ, or the labor of a minister, 
aids in the satisfaction of religious wants, our science 
takes account of them ; but in so far as they must be 
satisfied by divine power, supernatural or spiritual in- 
fluences, or the condition of the soul itself, this science 
does not reach them. Surely, this division between 
the material and the spiritual is a natural one. 

While we thus put theology and religion first, as 
the greatest things in the world, there is no question 
that the Social Sciences hold the second place. A 
science which helps us to use to better advantage the 
resources which God has given us, which feeds the 
hungry, and enables more people to live in cleanliness 
and decency, and improves the condition of men, 
9 



16 INTRODUCTION. 

stands next to the spiritual element in religion. A 
true social science is, indeed, one of the fruits of 
the spiritual power of Christianity ; since it is mainly 
Christian men who are engaged in the practical work 
of philanthropy. In " each one for himself," the 
struggle results in a terrible waste. The remedy is 
not Socialism. It is the mastery of social problems by 
those who love their fellow-men, and are ready to sac- 
rifice something for their welfare. The more general, 
economic knowledge becomes, the more likely we are 
to adopt methods of justice, and methods which give 
the best opportunity for the development of the indi- 
vidual. The great interest in the study of Economics 
is one of the results of Christianity. Let it be 
understood, however, that it is a science by itself, and 
that the line between it and the spiritual element of 
Christianity is distinct and broad. 

All Wants Should Not Be Satisfied. — It is 
evidently neither for the interest of the individual nor 
of society that all wants be satisfied. But to dis- 
criminate between the wants which should and should 
mot be satisfied, is the duty of the moralist, rather 
than of the economist. The same economic principles 
apply, in the main, to all classes of wants, regardless 
of the moral element in their satisfaction. As a stu- 
dent of economics, one may seek for the general prin- 
ciples which cover the economical satisfaction of all 
wants ; as a moralist, the same person may be called 
on to decide what wants ought not to be satisfied. In 
treating of wants in detail, we should not go out of 
our way to show how the drunkard can be furnished 



WANTS. 17 

•with liquor at the least cost ; but the laws which gov- 
ern the production of corn are the same, whether it is 
ground into meal or distilled into whisky. There 
will be differences of opinion concerning the propriety 
of satisfying numerous wants. General principles ap- 
ply to all alike. When it comes to questions of de- 
tail, there are large classes of wants that do not call 
for special treatment. It is necessary, however, to 
emphasize the fact that there are wants which ought 
not to be satisfied. 

It should be remembered, also, that the word 
■want is not synonymous with wish or desire. Its 
meaning is more nearly that of need, or something 
lacking. The term wants is not, however, synony- 
mous with needs ; it has a meaning of its own, in- 
cluding elements from both the others. 

The fact that a given desire can be satisfied by 
economic laws does not make it right to satisfy it. It 
is not uncommon to hear one attempt to justify a 
wrong by showing that the act was in accordance with 
economic laws ; but this is no more a justification 
than for a murderer to say that he killed a man by 
using his knowledge of the poisonous nature of certain 
chemical compounds, or of the laws governing the ex- 
plosion of dynamite. All knowledge is power, and all 
power is dangerous. But the world is better off for 
its knowledge of chemistry and electricity, as well as 
for its knowledge of Political Economy. There is no 
doubt that oppression exists, and that crimes are com- 
mitted by the use of economic laws. They are no 
more frequent because of the knowledge, but the 



18 INTRODUCTION. 

knowledge is sometimes used as an excuse for the 
crime. One may rob his neighbor, through the action 
of the laws of supply and demand ; but the showing 
how he did it, is no more a justification than for a 
desperado to explain how he stabbed a man. This 
point needs emphasis, because of the fact that some 
works on Political Economy leave the impression upon 
the reader that any act is right, if it can be shown to 
be in accordance with the laws of supply and demand ; 
e. g., that it is right to buy as cheap and sell as dear 
as one can. Whether it is or not, depends on circum- 
stances, and the question is one of morals rather than 
of economics. 



BOOK I. 

THE RESOURCES FOR THE SATIS- 
FACTION OF WANTS. 



BOOK I. 

THE RESOURCES EOR THE SATISFACTION OF WANTS. 

Chapter I. The Resources of Nature, 21 

Permanent — Consumable. 

Chapter II. The Ability to Labor, ...... 32 

Satisfies Wants Directly and Indirectly. 

Chapter III. The Productions of Human Industry, 38 
Permanent or Consumable — ■ Satisfy 
Wants Directly and Indirectly. 

Chapter IV. Society, 46 

Satisfies Wants Directly and Indirectly. 

Chapter V. Utility of the Resources, .... 49' 
Chapter VI. Value in Use, . 57 



BOOK I. 

THE RESOURCES FOR THE SATIS- 
FACTION OF WANTS. 

The resources which the world has for the satisfac- 
tion of wants are properly divided into four classes : 

I. The Resources of Nature. 
II. Labor. 

III. The Productions of Human Industry. 

IV. Society. 

CHAPTER I. 

THE RESOURCES OF NATURE. 

The earth as it was before man appeared, or as it 
has since been modified by natural causes, with the sun 
that shines upon it, and all the physical forces con- 
nected with it, are natural resources. Man had noth- 
ing to do with their creation. They are the gifts of 
Nature, or of God, to the human race. The earth 
was created for man, and intended to answer the needs 
of each generation, as its members are born and die. 

Some of the older political economists comprised all 
the resources of nature under the term "Land," on 
the theory that land includes the water which covers 

(21) 



22 RESOURCES FOR SATISFACTION OF WANTS. 

it, the air above it, the minerals found beneath it, the 
animals that roam over it, and the forces connected 
with it. It is a question of names; but names are 
important, and the attempt to use common words out 
of their ordinary signification has been productive of 
great mischief. 

1. Land, in its common acceptation, is the most 
important of the natural resources. It is the surface 
of the earth, whether covered by water or not. 

The first utility which land possesses for man is that 
of a place of residence ; a place to stand or lie down 
upon ; a place to build his wigwam or his palace ; a 
door-yard or a lawn for his children's playground or 
his own enjoyment ; a place to give him access to the 
sunlight and the air ; ground to separate him from his 
neighbors, for, much as he desires society, he likes a lit- 
tle space at times between himself and others. He wants 
a little ground, a portion of the earth's surface, which 
he can control, and he never realizes its value until he 
is deprived of it in a crowded city. This use is wholly 
apart from anything which the land may produce. 
The occupant may use it for two purposes, to make a 
garden or grow fruit ; but he desires the land for out- 
door space, even if he grows nothing but grass and 
shade trees. 

A great deal of land is needed for strictly resident 
purposes. Even on the American farm a certain por- 
tion is usually set aside for the house lot and grounds, 
and the whole farm is a range for the farmer's chil- 
dren. It fills to a partial extent the wealthy English- 
man's desire for a private park. The farm is not, 



THE RESOURCES OF NATURE. 2'6 

alone, a place for the production of crops ; it is a 
broad residence property, which in a city or crowded 
•country can be enjoyed only by one with large wealth. 
The second use of land is for commerce and manu- 
factures. Factories occupy more land than is often 
supposed, and some establishments require many times 
•as much outdoor yard room as is covered by buildings. 
It is not the amount of land, but the location, that 
niakes the site important ; and the location is of still 
more consequence in commerce. The point where land 
and water commerce meet is vital, and the land avail- 
able for commerce at favorable points is very limited. 
Ocean navigation must terminate in a harbor where 
ships can lie hi safety, with a depth of water where 
railroads and ships can transfer their freight. There 
must also be room for the breaking up of cargoes and 
the interchange of goods among different lines of 
"transportation, to reach different countries, and dif- 
ferent parts of the same country ; in short, room for a 
commercial city. Land in such localities is not abun- 
dant. He who controls it can levy an enormous toll 
for its use. So, in interior transportation. At Chi- 
•cago, railroads meet the lake, and a large tract of land 
is required for commercial purposes. Roads, i. e., 
facilities for communication and transportation, re- 
quire land, and a great deal of it. The acreage of the 
wagon roads in the United States is large. Railroads 
usually have a hundred feet in width, twelve acres to 
the mile, and to the land thus used must be added 
large acreage for yard room in cities, and still more 
land rendered useless by railroad traffic. 



24 RESOURCES FOR SATISFACTION OF WANTS. 

The uses of land for residence, manufactures and 
commerce were to a great extent overlooked in the 
past. Kicardo wrought out his principles of " diminish- 
ing returns" and the whole theory of "rent" from 
agricultural land. In a new country, such as the 
United States was a few years ago, agriculture is the 
mam purpose for which land is needed. The pro- 
portion of labor required for the production of raw 
materials a hundred years ago was many times greater 
than now. In the early discussion of land, therefore, 
almost all illustrations were drawn from agricultural 
land, and almost all reasoning based upon it. While 
land used for residence, manufactures and commerce is 
still small in area when compared with that used for 
agriculture, it is large in the aggregate. The most 
troublesome questions center about it. Principles 
which appear abstract in connection with land in the 
country, become very practical when applied to land in 
cities. 

Land for agriculture, as for all other purposes, should 
be considered as mere extension. The bottom lands of 
rivers have a wealth of vegetable mould which is a 
mine to draw upon, and the barren sand or the disin- 
tegrating limestone can be made productive by the 
efforts of man; but without the acreage, no man can 
make a farm. The natural fertility of the soil, ac- 
cunmlated through ages, should be classed with mines, 
which can be exhausted in the using. The land is 
measured by acres, not by fertility. Land is merely 
the extension of the earth's surface. 



THE RESOURCES OF NATURE. 25 

2. Water may be placed next to land in enumerat- 
ing the Natural Resources. It covers three-fourths of 
the earth's surface ; it separates continents with ad- 
vantage to nations; it is a highway for commerce. 
And this highway is not a canal which is only a line 
between two points ; it is a body of water which affords 
each country an opportunity for commerce with all the 
others. No railway system can be so perfect as an 
ocean over which ships can sail anywhere. By it the 
cost of carriage is reduced below that of any other 
possible means. Lakes and rivers, with the oppor- 
tunity for canals, form a system of interior water 
transportation of scarcely less importance. 

The influence of the oceans and great lakes on climate 
must not be forgotten. They insure an abundant rain- 
fall, and make the general cultivation of the soil pos- 
sible. Indeed, the water which covers so much of the 
earth may be said to make the rest habitable, and to 
afford to continents and nations that isolation which in 
the past has been necessary to the highest civilization. 

These large bodies of water also satisfy wants, 
directly, by affording countless desirable residence 
sites. The cottage by the sea or lake, in summer, has 
become popular because of the water and the air. A 
city on the ocean harbor or the lake has an advantage 
over one in the interior. The United States would 
lose immensely were the great lakes to be filled by 
some convulsion of nature. There are many persons 
who would like to see them drained, if they could get 
possession of the land at the bottom ; but the loss to 



9./J 



RESOURCES FOR SATISFACTION OF WANTS. 



"the whole country would be a thousand times the gain 
of the few. 

The use of water-power is also of great advantage. 
It is true that the real power here is the force of gravi- 
tation, and the sun-force which lifts the water from the 
ocean to fall in rain on high levels, so that the force of 
gravitation can act on it in its descent to the sea ; but 
the water is a convenient means of using this force, 
and the water-power of the world enables us to satisfy 
wants with far less labor. It will, also, endure after 
the coal has been burned up. 

For cleansing purposes no substitute could be found. 
The earth is washed by the rain, and the use of the 
hose from water-works is one of the methods of mak- 
ing great cities habitable. For domestic uses the 
amount of water required is small, but its value is 
very high. When the quantity is greatly reduced, its 
value becomes that of life itself. For drinking pur- 
poses, it is simply one of the resources of nature, 
absolutely essential, without which everything else 
would be worthless. The difficulty of supplying a 
■dense population with pure water, or even with water 
fit for drinking, is very great. 

3. The Atmosphere is the next resource which 
nature furnishes to satisfy wants. It is usually left 
out of the account, simply because so abundant. In 
taking an account of stock, in order to see what we 
have to satisfy wants with, we are not to omit the 
most important resource of all, simply because there 
happens to be a good deal of it. We are rather to be 
thankful that the stock is so laro-e. This resource 



THE RESOURCES OF NATURE. IT 

might have been placed first, because it is most essen- 
tial of all to life. One may live for a considerable 
period with nothing else ; but five minutes' deprivation 
of air is fatal. There are places and times when, not- 
withstanding its abundance on the earth, air suitable 
for human beings is difficult to obtain. Some one has 
imagined that the time will come when it will be 
pumped into the densely populated parts of cities and 
distributed as water now is. The problem of supply- 
ing it pure to our homes in the winter season, has re- 
ceived much attention. At present, however, we are 
only taking account of stock, and put down an im- 
mense volume of air, comparatively pure over the 
ocean, and with varying qualities on the land. 

4. The fourth group of resources is the Forces of 
Nature, including the power exerted by the sun, its 
light, heat, and chemical influence ; the attraction of 
gravitation, and the molecular forces. The sun is as 
much a resource for the production of grain as the- 
land. The power of gravitation is not only utilized in 
the water-wheel, but holds buildings in their places- 
All growth of plant life is dependent on natural forces. 
With the creation of these forces man has had nothing 
to do ; they existed before him ; they act continuously 
with a power beside which the physical power of man 
is infinitesimal. Man may discover and use, he can not 
create or increase them. It must not be forgotten, in 
all our future reasoning, that we have this power of 
natural forces, great almost beyond human conception^ 
as one of the resources for the satisfaction of wants. 



28 RESOURCES FOR SATISFACTION OF WANTS. 

5. The Minerals of the earth constitute the fifth 
resource. Man has had nothing to do with their for- 
mation ; he digs them out when he needs them. It 
may cost him some labor to find them, but he only dis- 
covers, he does not create them. In this respect they 
are like the natural forces. With minerals must be 
classed the natural fertility of the soil. This natural 
fertility, formed by the decay of vegetation in the past, 
much as the coal is formed from vegetable matter, is 
something apart from the land ; and may be used up, 
leaving us many acres of land as before. In popular 
language the land is said to be exhausted ; which means 
that its fertility is exhausted, as a mine is exhausted. 
The land remains, and can be made productive again. 

6. The sixth natural resource is the Forests or 
Timber. 

7. To the list must be added Wild Animals and 
Fish, which are very important resources for the satis- 
faction of the wants of a savage. 

This completes the list of resources which nature 
provides for man. It is well to spread them all out 
before us, that we may see what we have, and not con- 
fuse them with other general classes yet to follow. 
They are : 

1. Land. 

2. Water. 

3. Air. 

4. The Forces of Nature. 

5. The Minerals and Natural Fertility of the Soil. 

6. Timber. 

7. Wild Animals and Fish. 



THE RESOURCES OF NATURE. 29 

Permanent and Consumable. — The first four of 
the Natural Resources are permanent ; that is, they 
are not destroyed by use. The air and the water and 
the land are used by the men of each generation as it 
occupies the earth, and are left to those who follow. 
The sun shines eternally, and the forces of nature will 
act forever. The land can not be destroyed by the 
using ; great temporary injury may be inflicted, but 
not beyond the power of repair. 

It is not so with the last three resources. Minerals 
are consumed in the using. Coal is destroyed in the 
burning ; and although iron continues to exist in an- 
other form, the ore from which it is made is destroyed. 
When the bed of ore is exhausted, it will not be re- 
plenished within any time we can take into account. 
When a substance is transformed, as iron ore into 
iron, it is said to be consumed, in the production of 
something else. We have a new substance, but no 
longer the old : we can not have both. 

Timber, wild animals and fish, while they are con- 
sumed in the using, differ from the minerals, in that 
they may be speedily reproduced by nature, alone, or 
with the efforts of man. The difference is, that while 
the ore is consumed in the production of commercial 
iron which goes to erect a building, and while the tim- 
ber is cut down and consumed in the production of 
lumber for the same building, the timber will grow 
again. The hard-shot forest is soon replenished with 
game. Fish may be taken for ages, and nature main- 
tain the supply. All of these three classes of Natural 
Resources — minerals, timber and fish — are Consuma- 



30 RESOURCES FOR SATISFACTION OF WANTS. 

hie Resources, because consumed in the using ; and the 
distinction between them and the Permanent Re- 
sources is quite important. 

Our classification will then stand : 

I. Resources of Nature — 
1. Land. 



Permanent Natural 
Resources. 



2. Water. 

3. Air. 

4. The Forces of Nature. 

5. Minerals. y Consumable. 

6. Timber. ) Consumable, but can 

7. Wild Animals and Fish. ) be replaced. 
Directly and Indirectly. — The Resources of 

Nature satisfy wants, directly or indirectly. The air 
when breathed satisfies a want directly. So, also, land 
when used for residence purposes. The occupant 
wants the land, and not something that can be pro- 
duced from it. The savage satisfies his wants, directly 
by wild fruits, fish and game. 

A resource satisfies wants indirectly when it aids in 
the production of some other resource, or enables some 
other resource to be used in satisfying a want. It is 
only a means to an end. Such is land used for agricul- 
ture, or a water-power employed in turning the wheels 
of a factory. Coal satisfies wants, directly, when burned 
in a parlor grate ; indirectly, when used in making 
steam for a factory. 

We shall find that this distinction between the satis- 
faction of wants directly, or indirectly, runs through 
all of our subject, and should never be lost sight of. 

It will be convenient often to speak of the Resources 



THE RESOURCES OF NATURE. 31 

of Nature as Natural Wealth. There is a difference 
of opinion as to the proper use of the term " wealth," 
but with the qualifying word there is no danger of 
misunderstanding, and this use of the term is also in 
accordance with popular language. It is the wealth 
of nature, or Natural Wealth. 



CHAPTER II. 

THE ABILITY TO LABOR. 

Next to the Resources of Nature comes that of hu- 
man labor. The Natural Resources are placed first, be- 
cause they are first in the order of time. Without them 
the existence of man would be impossible. Labor comes 
next, because it first makes use of the Natural Resources ; 
and is thus next in the order of time. 

We should distinguish the ability to labor from the 
labor actually put forth. It is the ability which men 
possess which constitutes the Resource, and this ability 
may exceed many times the labor actually performed. 
We are now taking account of stock, — of what the 
world has to satisfy wants with, — and this account 
must include all the ability which men possess to per- 
form labor of any kind, of either hand or brain. 

Labor, in all works on Politial Economy, includes 
the efforts of both body and mind. The terms 
" Working man " and " Laboring man " are used in 
the popular sense to denote muscular labor, but the 
simple term " Labor " is used, especially in economic 
writings, to include mental labor as well as physical. 
We are obliged to have some general term, and 
there is no other. It is not a question of the irksome- 
ness of the different kinds of labor; it is only the 
power to do, to accomplish something in satisfying the 
world's wants. It is indeed impossible to separate 
(32) 



THE ABILITY TO LABOR. 33 

entirely mental and physical labor. The lowest form 
of labor requires some brains, else the work is better 
done by a machine ; and the more brains, the better. 
The work of the trainmen on the railway would per- 
haps be classed as manual labor, yet a high order of 
mental effort is required. The man who knows 
nothing, will find that muscular strength will not put 
him in charge of a locomotive ; though some strength 
and endurance are required in addition to mental abil- 
ity, in order to run it. The profession of civil engin- 
eering would be classed as brain work, yet some 
branches of it require more muscular exertion than is 
put forth by a street laborer. What the world wants 
is results, whether accomplished by manual or mental 
labor, or both combined. Under the general term 
■" Labor " we therefore include all the ability which men 
possess to do the world's work. 

There is great difference in the mere muscular 
strength of men, and still more difference in the en- 
ergy with which they use that strength. One English- 
man is worth five or six of the natives of India, even 
for the most common employment. The skill which 
some men possess, the knowledge they have, and the 
intelligence that directs, are of far more importance 
than the power to lift and carry. We can not sepa- 
rate the knowledge and skill of the man from the 
man himself. All the power he has to do, the skill of 
eye or hand, all that he knows, his intellect and judg- 
ment, his mental capacity to acquire knowledge and 
skill, — all these go to make up his ability to labor. 
The locomotive engineer easily does his work, because 



34 RESOURCES FOR SATISFACTION OF WANTS. 

of his knowledge and skill and mental make-up. A 
hundred Indians could not do it ; the more there were 
of them, the worse it would be for the engine. The 
power of a successful physician consists wholly in his 
knowledge and skill and judgment. No amount of 
ignorant labor could do what he does. The manage- 
ment of railways and factories, rendering the physical 
labor employed many times as efficient, is the result of 
skill and knowledge and mental qualities. The most 
valuable ability to labor is that of superintendence. 
One man may save the labor of a thousand. A poor 
superintendent may cost his company many times the 
salary of a man competent for the place. The great 
labor-saving inventions are due to intelligence and 
knowledge. The power to invent is the power to la- 
bor ; and one man by an invention may save the labor 
of a multitude. 

Under the ability to labor we must also include all 
the knowledge and experience gained from past ages. 
This knowledge and experience can be used only as it 
is known by living men. There are " Lost arts." 
What the world possessed in them died with the men 
who understood them. If they are rediscovered, so 
much more is added to the power of labor. 

Unlike the Natural Resources, which remain the 
same from age to age, Labor is a continually changing 
force. For the purpose of satisfying wants, its power 
has increased many times since civilization began, and 
is increasing with great rapidity to-day. A hundred 
men can do the work done by a thousand a century 
ago, not alone because of machinery ; but because o£ 



THE ABILITY TO LABOR. 35 

the skill in using it, because of the knowledge of new 
methods. The high degree of skill and mechanical 
ingenuity shown in the United States is the result of 
training for generations. The natural aptitude is 
largely inherited. The power of the world to work, is 
the fine hand, and brain, and mind inherited from the 
past. All the knowledge in the world to-day, even the 
habit of labor, is inherited ; and it is useless to expect 
to educate a savage race to a high degree of ability to 
"work, except through generations. Labor, as a re- 
source for satisfying wants, is the ability of men to 
■do. It is more mental than physical. In this age, 
muscular power is the smallest part of it. The knowl- 
edge of Nature's resources and laws, as discovered by 
physical and chemical research, and the practical spirit 
and power of invention which enable the men of the 
present day to make use of the idle forces of the 
past, — to use steam and electricity where past ages 
employed human muscle, — these make up the greater 
part of the resource of Labor. 

The ability of a people to labor, therefore, does not 
depend on their number, so much as on their physical 
and mental qualities. We should also add their mor- 
al qualities ; since men of moral character, when the 
comparison is made between large numbers, are able 
to accomplish much more labor during a lifetime than 
others. The ability of the native white population of 
the United States exceeds by a thousand-fold that of 
an equal number of people in Central Africa. No 
mistake is greater than to estimate the ability of a na- 
tion to labor by the number of its people. The time 



36 RESOURCES FOE SATISFACTION OF WANTS. 

may come when all the work that is done to-day can 
be done by one-tenth of the people now engaged. If 
this should be the case, the result would not be the 
idleness of the other nine-tenths, but the doing of 
more work, and the better satisfaction of wants. 

Directly and Indirectly. — Labor satisfies wants- 
directly or indirectly : Directly, when one does some- 
thing for himself or another; indirectly, when he 
helps to produce some articles for use. As soon as- 
a boy is old enough to wash and dress himself, he has 
begun to satisfy some of his own wants, directly. The 
amount of labor expended in doing for one's self and by 
members of a family in caring for one another, is a large 
part of all the manual labor performed. Most politi- 
cal economists leave it out of the accoimt altogether, 
because it is not paid for. Such labor is not the only 
kind for the direct satisfaction of wants. The teacher,, 
preacher, singer, lawyer, and physician satisfy wants 
directly, by teaching, preaching, conducting one's case 
at law, and prescribing when one is ill. 

Farmers, on the other hand, satisfy wants indi- 
rectly. Their labor is employed in the production of 
commodities, wheat, corn, cotton, beef,- etc., which 
commodities satisfy wants. Neither is it the labor of 
the artist, but the picture he has painted, that we 
want. He satisfies a want indirectly, through his pic- 
ture. 

Many of the older political economists divided la- 
borers into " Producers and non-producers," which 
division has been very misleading, and was frequently 
supposed to reflect unfavorably on those classed as 



THE ABILITY TO LABOR. 37 

non-producers ; whereas, many of the so-called non- 
producers are engaged in the most important work of 
the world, They do not produce commodities, for the 
reason that they satisfy wants directly ; and the ob- 
ject which the world has is not production, but the 
satisfaction of wants. Some of the world's workers 
satisfy wants directly, by a short cut ; others satisfy 
them in a more roundabout way, by producing some- 
thing which can be used in satisfying wants. A 
singer satisfies wants, directly, when he sings before 
an audience ; a sculptor satisfies a want, not directly, 
but by producing a statue from a block of marble, 
and the statue satisfies the want. Here are two ar- 
tists, perhaps of equal rank ; the one satisfies wants 
directly, the other indirectly. If it be asked, which 
class is engaged in the more honorable employment, 
the reply is, there is no difference so far as this divi- 
sion is concerned ; since the employments usually 
counted the most honorable are divided between the 
two. The preacher, teacher and lawyer satisfy wants 
directly; the editor and author of books, indirectly. 
The distinction is, however, of the greatest economical 
importance, and of more importance in the considera- 
tion of Labor than of the other Resources. 



CHAPTER III. 

THE PRODUCTIONS OF HUMAN INDUSTRY. 

It may at first appear that the goods produced by 
human industry are of so many kinds as to defy classi- 
fication ; yet a little reflection will show that nearly all 
of the most important fall at once into very few 
classes, and that for many reasons it is important that 
these few classes be sharply defined. 

1. Buildings. A large part of all the produced 
wealth in the world is in buildings. They are a, per- 
manent resource ; for while nothing made by man en- 
dures forever, these endure for many years. They are 
permanent in contrast with food, which is consumed 
in the satisfaction of hunger ; or with clothing, which 
lasts perhaps a year, and when once worn is practically 
unfitted for other persons. Permanent resources once 
produced remain to satisfy wants for a long period, 
often for successive generations ; while consumable re- 
sources must be replaced with new productions each 
year. One builds a house for a lifetime ; he raises a 
new crop of wheat each year. 

Buildings are of two classes : Residences, most pub- 
lic buildings, and others which satisfy wants directly ; 
and factories and commercial buildings, which satisfy 
wants indirectly. A house is an object in itself. 
When one has gained it, perhaps at the cost of many 
years' labor, he feels that a very important want, both 
(38) 



PRODUCTIONS OF HUMAN INDUSTRY. 39 

for himself and family, lias been satisfied for his life- 
time. The resource is permanent, and it satisfies 
wants directly. Dwellings must necessarily form a 
very large portion of all the produced resources in the 
world, since every family needs a dwelling of some 
kind ; and most civilized men are willing to expend a 
large part of their labor in securing the use of one for 
their families. 

Buildings which satisfy wants indirectly also com- 
pose a large portion of the produced wealth in the 
world. The costly stores and warehouses of a great 
city, the factories of cities and factory towns, nearly 
all the structures in the land, except residences, sat- 
isfy wants indirectly. Factories are erected, not as an 
end in themselves, but to produce something that will 
satisfy wants. 

Buildings are therefore divided into two classes : 
Dwellings, with a few others satisfying wants directly ; 
and buildings satisfying wants indirectly. 

2. Tools and Machinery. Next to factories and 
buildings used for commercial purposes, come tools and 
machinery. Even tools form a considerable stock, 
since some must be in the hands of every workman ; 
but the machinery in the modern factory, and all that 
in use in our present civilization, of itself exceeds the 
produced wealth of ancient times. "With a few excep- 
tions, tools and machinery satisfy wants indirectly ; 
they are not an end, but the means of further produc- 
tion. 

3. Roads. Roads include all improvements on 
land or water by which transportation, travel or com- 



40 RESOURCES FOR SATISFACTION OF WANTS. 

munieation is facilitated; such, as common highways,, 
railroads, street railways, river and harbor improve- 
ments, canals, telegraph and telephone lines, etc. A 
lake or ocean needing no improvement is solely a re- 
source of nature ; ships sail over it as an emigrant 
drives his team over a trackless prairie. But when a. 
highway is turnpiked and drained, a railroad bed is 
graded and blasted and ironed, telegraph lines are 
erected, rivers are cleared and dredged, and harbors- 
are improved, the improvements are a part of the Pro- 
ductions of Human Industry. Roads are an impor- 
tant element of civilization. They include nothing- 
but the track or the wires of a telegraph line. The 
wagons driven on the highway, the rolling stock of a 
railroad, the ship and the canal boat belong to the 
class of Tools and Machinery. 

4. Imjirovements on Land. We must always dis- 
tinguish sharply between land and its improvements. 
Land is the gift of nature, and can not be increased ; 
improvements are the work of man. Both buildings 
and roads are usually regarded as improvements on 
land, and in law are classed as real estate. Land is 
so essential that it is impossible to produce many per- 
manent resources without connecting them in some 
way with it. Buildings can not be erected except upon 
it ; one must get possession of a piece of ground 
before he can build. Roads can be made only over 
it. But while buildings and roads are properly enough 
called improvements on land, they are so distinct, so 
numerous and important, that it is more convenient to 
put them in a class by themselves ; and to reserve the 



PRODUCTIONS OF HUMAN INDUSTRY. 41 

title " Improvements on Land " for those more closely 
connected with the soil. 

The most important of these are improvements on 
agricultural land ; such as the drainage of swanips, 
the increase in the fertility of the soil by well-known 
methods of cultivation — hedges, orchards, vineyards, 
fences, and all that goes to make a good farm better 
than land in a state of nature. Their market value 
may be more than that of the land itself. An interest- 
ing question is that of timber, and one's understand- 
ing of it is a good test of his grasp of the relation 
of land to improvements. In a new and heavily- 
wooded country the removal of timber is popularly 
regarded as an improvement. There is no way of mak- 
ing a farm except by clearing the forest. In after 
years the timber is greatly needed ; the land would be 
more desirable with the timber on. The facts are, 
that timber is not land, but timber. It is always a 
blunder to misname anything. Timber is not land ; 
but, like land, is one of the Resources of Nature. 
Unlike land, it is consumed in the using. As a mine 
is worked out and exhausted, so a forest is destroyed. 
A new settler may remove the timber to get at the 
land ; but the simple fact is, he has destroyed the tim- 
ber. When there is abundance of it, more than his 
generation wants, its loss will not be felt ; and it en- 
ables him to get the benefit of the use of the land. 
When more people come, the timber is wanted and, if 
standing, would perhaps be worth more in the market 
than the land from which it was taken. 

Improvements on agricultural land, in the main,. 



42 RESOURCES FOR SATISFACTION OF WANTS. 

satisfy wants indirectly. A swamp is drained in or- 
der that it may produce better crops. Orchards are 
planted, not for the trees, but for the fruit they are 
expected to produce. Improvements on residence and 
public grounds, on the contrary, usually satisfy wants 
■directly. A lawn in city or country is made to 
please the eye. Trees are planted, not for fruit, but 
for shade. One wants the lawn and the trees about 
his dwelling. So, public and private parks are im- 
provements on land which satisfy wants directly. 

If the reader will stop to think for a moment, he 
will see how large a portion of all the resources pro- 
duced by human industry is included in these four 
classes. It is much more than half. If we were to 
stop our classification here, we should find the arrang- 
ing of the greater part of Produced Resources in 
these four classes, of inestimable value in our further 
study. There remain, however : 

5. Finished Goods which Satisfy Wants Directly. 
These are of two classes : permanent, and those 
which will be consumed in the using. Of the first, 
are articles like pictures and statuary. It is true, 
they will not last forever, -but thousands of people 
may look at a painting without injury to it. These 
goods, like buildings, satisfy a want without being in- 
jured thereby. We can, therefore, afford to bestow 
great labor upon them ; knowing that when once pro- 
duced, they will remain for a long period to satisfy 
wants, perhaps of many people besides the owner. 
Some of this class of goods, of which household fur- 
niture is the most important example, have only a low- 



PRODUCTIONS OP HUMAN INDUSTRY. 43 

er degree of permanency. They wear out with use : 
they cease to satisfy wants because of changes in 
style, etc. Nevertheless, they are often handed down 
from father to son, or more often from mother to 
daughter. Few people expect to furnish a house 
anew every year ; the majority of people regard good 
furniture as purchased to last for many years, if not 
for a lifetime. 

The second class of finished goods is those that 
are consumed in the using. The most important of 
these is the food supply. Clothing is not absolutely 
destroyed with once using, but is practically rendered 
worthless for the use of any other person, and is rap- 
idly worn out. 

Some goods will occur to the reader which seem to 
fall into one of these two divisions as readily as into 
the other. They are destroyed in the using, but they 
last for a considerable time. Since a year is the nat- 
ural measure of the production of goods, those which 
are usually replaced year by year should always be 
classed as consumable. To be classed as permanent^ 
goods should be capable of lasting, under favorable 
circumstances, at least the greater part of a lifetime. 
They should be goods which one does not expect to re- 
place as he does the clothing he wears ; they should be 
like books ; while one may intend to buy other books 
on the same subject, he does not expect to replace the 
same book. 

6. Materials and Goods in Process of Produc- 
tion. The aim of all production is to satisfy wants. 
Finished products may be buildings, or roads or tools. 



44 RESOURCES FOR SATISFACTION OF WANTS. 

designed to aid in producing something else ; but the 
final object is to produce something which will satisfy 
wants, directly. Thus, our last class was " Finished 
goods satisfying wants directly." There is a still larger 
class of goods in the process of production. Many 
of these are finished so far as one producer is con- 
cerned. Wool is to the farmer a finished product, but 
it does not satisfy wants in this condition. Cloth is 
considered by the manufacturer a finished product, but 
it is really only a material for further production. 
Not until it is made into clothing is it ready to satisfy 
wants. The quantity of materials, and goods which 
are destined to become materials, is many times greater 
than the finished products. 

Of the completed products of human industry, sat- 
isfying wants directly, which are speedily consumed in 
the using, it is not desirable that the world should 
have a large stock on hand. The labor of preserving 
and taking care of these products for even one year is 
considerable. Wants change with the, fashions. These 
commodities can be produced anew every year, and it 
is necessary only to have a stock sufficient to last from 
year to year, and to guard against all danger of fail- 
ure. Improved land, good roads, good machinery, and 
skilled labor, are far more important than a stock of 
provisions and consumable goods ; always assuming 
that there is a sufficient amount of the latter to last 
until more can be produced by ordinary methods. 

Of domestic animals some will become food mate- 
rial, and some are used like machinery in the work of 
production. 



PRODUCTIONS OF HUMAN INDUSTRY. 45 

The productions of human industry will, for con- 
venience, frequently be called Produced Wealth. The 
use of the prefixes Natural and Produced will 
avoid any confusion with the idea of wealth as the 
term is used by some writers. Both Natural and Pro- 
duced Wealth include many resources not covered by 
the term wealth as used by those who define it by the 
term value. It is not the intention here to enter into 
a discussion of the meaning of disputed terms. Let 
the reader attach whatever meaning to the word 
" Wealth " he has been accustomed ; but regard these 
as two new terms, which are here defined. Natural 
Wealth is the Resources of Nature. Produced Wealth 
is the Resources Produced by Human Industry. The 
question of value does not enter into these definitions. 



CHAPTER IV. 

SOCIETY. 

The fourth resource for the satisfaction of wants is 
Society. This is the presence and companionship of 
human beings, considered apart from their ability to 
labor. Robinson Crusoe led a dreary life, and the so- 
ciety of even his man Friday was appreciated. Society 
includes the home ; and, in addition to the relations of 
father, mother, wife, brother, sister, the presence of 
companions, neighbors and friends satisfies many of 
the noblest wants of humanity. The drift toward the 
cities is partly to get in a crowd, to see and associate 
with more people. 

The mere presence of human beings does not consti- 
tute society ; it does not necessarily make society that 
satisfies the wants of others. Many of the produc- 
tions of industry are only rubbish which we would pay 
something to have removed. So, there are men and 
women who are a curse to the other people of the 
earth. Some of them we remove to work-houses and 
prisons. Society may be at fault to some extent for 
their character — we are not now discussing that point — 
but, as they are, the earth would be better off without 
them. Churches and missionary societies succeed in 
reforming many of them ; and one object of philan- 
thropic work is to improve the character of the disa- 
greeable and wicked, for the sake of others as well as- 

(46) 



SOCIETY. 47 

for their own sake. It is necessary here only to call 
attention to the fact that not all human beings satisfy 
the want of others for society. 

This want, indeed, can be met only by persons with 
habits and tastes to some extent like our own. Chi- 
nese may be society for Chinamen ; but even if an 
American desires their labor, he seldom wishes their 
companionship ; and if he has no use for their labor 
he would pay something to have them removed from 
his neighborhood. Social circles naturally form among 
people of the same race and nationality, and are lim- 
ited to those whose habits are very similar. 

The want satisfied by society is so real that it is 
often expressed by a high money value. A residence 
lot of a few feet front sells for twenty thousand dol- 
lars, when other lots equally near and convenient to 
the business center of the same city can be had for 
five thousand. They are equally desirable in every re- 
spect except the single one of the neighbors who live 
on the same street and in the vicinity. Fifteen thou- 
sand dollars is, in this instance, the commercial value 
of the society of a particular neighborhood. 

The development of a society which shall better- 
satisfy the wants of its members is as legitimate a 
subject for discussion in our science as the production, 
of food or dwellings, but it is far more difficult. 

Society Satisfies Wants Indirectly. Society satis- 
fies want indirectly by affording opportunity for the 
division of labor, and by permitting the production of 
goods in large quantities. 

The advantage of the division of labor — a technical 
4 



48 RESOURCES FOR SATISFACTION OF WANTS. 

phrase made popular by Adam Smith — will be shown 
further on. Such division, by which each one does a 
particular kind of work, is possible only where there is 
a considerable number of people. If each man devotes 
his entire time to a single branch of labor, the num- 
ber of workmen must be very large. It must be 
much larger than the number of trades and branches 
of trades, since in order that one man may work all 
the time at so simple a thing as bending piano wires, 
hundreds or thousands of men must be employed in 
each branch of the more common trades. 

The advantage of producing goods in large quanti- 
ties is well understood. Cotton prints are now manu- 
factured at a cost of less than five cents a yard ; if 
made in small quantities, they could not be produced 
at a cost of fifty cents. But cotton prints can not be 
made in large quantities unless there is a large num- 
ber of people to use them. One person can teach 
thirty children of the same age and attainments as 
well as she could teach one, perhaps with more advan- 
tage to each. If there were only one child to be 
taught, the labor would be proportionately thirty times 
as great. 

It is the satisfaction of human wants, so far as they 
can be satisfied by these four classes of Resources, that 
forms the subject of this volume. That is, the satisfac- 
tion of wants so far as they can be satisfied by the Re- 
sources of Nature, Labor, the Productions of Human 
Industry, and Society, or the presence and companion- 
ship of human beings. 



CHAPTEE V. 

UTILITY OF THE RESOURCES. 

Utility is the quality of an object which makes it 
useful, or fits it to satisfy human wants. Utility re- 
sides in the object. It is a quality of the object and 
not of the user. The quality of sweetness which is in 
sugar makes it useful and is its utility. This quality 
is not at all dependent on the number of people who 
use it, or on the quantity which may be desired. The 
popidar idea of utility is the correct one. Iron, wood, 
water, air, grain, fruits — these are useful, or have 
utility. All Resources for the Satisfaction of Wants 
possess utility. It is the possession of this quality 
that makes them resources. 

It is to be regretted that Professor Jevons, in his 
admirable work, " The Theory of Political Economy," 
uses the word " Utility " in the sense of " Value in 
Use." There are three ideas which we must keep dis- 
tinct — Utility, Value in Use, and Value in Exchange. 
It has been the mistake of many political economists 
to attempt to dispense with one of the three, whereas 
not one of them can be spared. One who reads Pro- 
fessor Jevons, or other writers who have followed him, 
should remember that by " Utility" he means precisely 
Avhat will hereafter be defined as Value in Use ; and 
that the Utility here considered is an entirely different 
thing. It is a question of names, not of ideas. 
(49) 



50 RESOURCES FOR SATISFACTION OF WANTS. 

It should be noticed that an article may have the 
utility of satisfying wants directly, as food and cloth- 
ing ; or of satisfying them indirectly, as the plow by 
which the farmer fits the ground for a crop. 

An object may have more than one utility, and most 
objects have. Water, for example, has the utility of 
satisfying thirst, and thus of preserving life. It has 
a lower utility of cleansing, and a still lower utility of 
furnishing the means of navigation. Objects are used 
for their highest utility first ; and when they are suf- 
ficiently numerous to satisfy the more important wants,, 
lower utilities come into play. If one had an allow- 
ance of only a pint of water per day, it might all b& 
needed for quenching thirst ; but where water is 
abundant, it is used for less important purposes. 
These different utilities in the same object may be as 
distinct as different utilities in different objects. New 
utilities are constantly being discovered, sometimes in. 
objects which have been used for other purposes, and 
often in objects heretofore useless. It was a great 
step forward when it was learned that anthracite coal 
could be burned. A utility of what seemed a black 
stone was discovered. 

The utilities of many objects can be increased by 
human effort. It is one of the objects of labor to in- 
crease them. The knife-blade has a higher utility 
than the iron ore or the steel from which it was made. 
Great labor has been put forth to convert the steel 
into knife-blades ; and it was expended solely to give 
more utility to the steel. Gain in utility is always a 
benefit to mankind, because it increases the power of 



UTILITY OF THE RESOURCES. 51 

the Resources in satisfying human wants. The greater 
the utilities, population remaining the same, the better 
<jan wants be satisfied. 

1. The Utilities of the Resources of Nature. 
— Strictly speaking, the Utilities of the Resources of 
Nature can seldom be increased. They are as they 
were created, and nearly all additions to them are 
■classed as Produced Wealth. The ditch which drains 
the swamp, the fences and buildings put upon the land 
by man, are all Produced Wealth. The knife-blade 
itself is classed as Produced Wealth. 

The land, the air and the water remain largely as 
"they are from age to age. To some slight extent they 
are modified, usually more to their damage than to 
their improvement. Air may be vitiated by a manu- 
facturing establishment, and its utility decreased. A 
stream of water may be polluted by the drainage of the 
factory, and its utility for drinking purposes destroyed. 
The natural fertility of land may be exhausted, and 
the forms of consumable natural wealth, such as coal 
and timber, are actually destroyed with the use, and 
their utility is gone. On the other hand, the atmos- 
phere is sometimes purified by the drainage of the 
swamp, but this is a comparatively slight change. The 
general principle is that the utility of Natural Re- 
sources remains much the same from century to cen- 
tury. 

There has been a continued discovery of new utili- 
ties of the Natural Resources, and this discovery is 
sometimes mistaken for an increase in the utility of 
the resources themselves. When it was first found 



52 RESOURCES FOR SATISFACTION OF WANTS. 

that the red ore could be smelted, and wrought into 
iron bars, an unsuspected utility in this seeming stone 
was discovered. The world was so much the richer^ 
just as an individual would be who should discover a 
buried treasure hidden on the estate he had inherited, 
from his ancestors. There would be no more gold in 
the world than before, but he discovered that which 
was hidden. There have been many discoveries of 
new utilities in well-known objects. When it was 
learned that water could be converted into steam, and 
the steam into power, the world was so much the 
richer. 

2. Utility of Produced Wealth. — The utility 
of Produced Wealth, on the contrary, can be very 
greatly increased. Indeed, this is the main object of 
labor. Take a bar of steel and convert it into watch- 
springs ; the utility is many times as great. Take 
lumber and brick, and build them into a dwelling ; 
the utility is far greater than that of the materials. 
The wool produced by the farmer is manufactured^ 
with great labor, into cloth and clothing. Indeed, the 
object of expending labor upon materials is to increase 
their utility ; and the object of all labor, which does 
not satisfy wants directly, is to increase the utility of 
some part of Produced Wealth. 

A very considerable portion of Produced Wealth 
consists in improvements on land, which may seem to 
be an increase in the utility of Natural Resources. A 
swamp is drained, and the waste land bears a crop. 
Sometimes Produced Wealth is so united with land as 
really to become a part of it, in which case the utility 



UTILITY OF THE RESOURCES. 53 

of the land is increased by human labor. It is usually 
much better to treat of all improvements on land apart 
from the land. They may be destroyed, but the land 
will remain forever. 

Minerals and timber when once removed from the 
land are regarded as Produced Wealth. The timber 
is like a crop which can be grown again in years ; and 
while minerals can not be replaced, their removal from 
the soil, and their great transformation, make it neces- 
sary to treat them as Produced Wealth. We need 
never lose sight of the element of Natural Wealth in 
them. 

3. Utility of Labor. — The utility of labor is 
its power to satisfy wants, either directly or indirectly. 
We have before seen that great difference exists in the 
power of men to labor ; that the services of some men 
will accomplish a hundred times as much as those of 
others ; that is, they possess far more utility. There 
are, however, many utilities of labor. Most men have 
the power of doing a considerable number of useful, 
things. Under modern civilization, each group of 
men learns to do things which others can not do ; and 
they acquire skill, which makes their labor many times 
as usefid. 

The utility of labor can be very greatly increased. 
This is one of the objects of education, and almost 
the only object of learning a trade, or acquiring skill 
in any department. It woidd doubtless be profitable 
to the world to give even more attention to increasing 
the utility of the labor of the rising generation. With 
more general education and better training, there is 



54 RESOURCES FOR SATISFACTION OF WANTS. 

no reason why the next generation might not be able 
to accomplish much more than the present, with no 
more exertion. 

4. Utility of Society. — It is one of the dis- 
tinctive features of this book that it treats, not only 
of the subject of Economics from the point of view 
of human wants, and of the resources for their satis- 
faction, but that it also takes account of Society as 
one of the great resources for the satisfaction of wants, 
equal in importance to that of labor and produced 
wealth. As soon as men are provided with the lowest 
necessities of life, the desire for society becomes one 
of the strongest of all. The boy thirsts for com- 
panionship. He is not happy unless he can be with 
other boys. The condition of a single human being 
on an island is the most pitiable possible to conceive. 
From the lowest conditions of life to the highest, so- 
ciety is equally desired and equally important. 

The utility of Society must be carefully distin- 
guished from the utility of Labor. A good workman 
may be a thief, or a very undesirable companion. A 
pleasant companion may have little power of labor. 
Society and Labor are both embodied in human beings, 
but have nothing else in common. 

As the utility of labor can be greatly increased by 
±he education or training of the workman, the business 
manager, and the scientific investigator, so the utility 
of society can be greatly increased by the education of 
the people in morals and manners, in general intel- 
ligence, and in all that goes to make a desirable com- 
panion. 



UTILITY OF THE RESOURCES. 55 

The utility of some parts of society is a negative 
■quantity ; so much less, or worse, than no society. It 
was the custom of England, years ago, to transport 
•criminals beyond the high seas, in order to get rid of 
their society. Undoubtedly, if any village, and espe- 
cially any city of considerable size, could be free from 
the presence of a certain portion of its people, it would 
be a much more desirable place to live in. This sort 
•of society is a negative quantity. It is a damage to 
the city and the people ; and the world would be better 
off if these undesirable persons did not exist. Oc- 
casionally undesirable society is found in connection 
with considerable labor power, and heartless capitalists 
:are willing to inflict any sort of people upon a nation, 
if they can thereby secure labor cheaper, and make 
some money out of it. Such employers are the en- 
•emies of the well-being of the human race. 

The improvement of society, that is, the increase 
in its utility for the satisfaction of wants, consists in 
eliminating undesirable elements, and in preventing 
their increase. Most of the recent immigration, how- 
ever much it may add to the labor power of the coun- 
try, introduces very undesirable elements of society. 
This is the practical objection to the Chinese. While 
they have labor power, their utility for the purpose of 
society is a negative quantity, and lowers the average 
utility of society as a whole. 

Positive efforts for the increase of social utilities are 
those of the churches and schools, and all moral in- 
fluences which tend to make men better companions. 
The present high utility of American society is very 



56 RESOURCES FOR SATISFACTION OF WANTS. 

largely due to schools and churches, although Inherited 
traits count for a great deal. Improvement in moral, 
intellectual, and social character is, of course, to be* 
made mainly among the young. A proper education 
of the children of any country, provided it were free 
from the influence of immigration, would, in a few 
generations, greatly increase the utility of the society 
of the nation. Every city would be a far more desir- 
able place- of residence. Contrast life in a convict 
colony with life in a colony composed of Christian 
people ! Contrast life among idiots, the stupid and 
ignorant, with life among intelligent and well-informed 
persons ! Contrast life among the Indians with the 
life of a New England city or village ! It is as im- 
portant that we make provision for desirable society 
in the future as that we build houses and factories. 



CHAPTER VI. 

VALUE IN USE. 

Value in Use depends both on Utility and the num- 
ber and wants of the people. Nothing can have value 
which is not useful, but Value in Use shows how scarce 
an article is. So long as there are more objects than 
the people can possibly use, they have no value ; but 
when the number of people increases, so that articles of 
any kind become scarce, this scarcity is expressed by 
Value in Use. The scarcer they become, the higher 
the value. 

Value in Use must not be confused with Value in 
Exchange. Exchange Value is merely what one can 
get for a thing in the open market. There will be no 
confusion if we remember that Value in Use is what a 
thing is worth to use ; Value in Exchange is what it is 
worth to sell. " Exchange " will be the subject of a 
subsequent book, and Exchange Value will, of course, 
be treated hi that place. 

Value in Use is the scarcity of useful things. It 
shows the relation between useful things and the num- 
ber of people who desire them. Value always means 
scarcity, and high values are always unfortunate for 
the world. Let a traveler in the desert be perishing 
with thirst ; an allowance of a quart of water per day 
would have the value of life to him. "Water ordina- 
rily has no value, because it is abundant. One of its 
(57) 



58 RESOURCES FOR SATISFACTION OF WANTS. 

utilities is that of preserving life, and when it becomes 
sufficiently scarce its value is equal to this utility. A 
gallon of water per day would have a higher value to 
this traveler than a single quart, but not greatly 
higher. The quart preserves his life. A gallon is 
convenient for cooling his face and hands, a minor con- 
sideration. A hogshead of water per day might have 
but little more value than a gallon, since a gallon 
would be all he could use. Where he has a hogshead 
per day, one quart is practically nothing, because he 
can spare any particular quart and still have more than 
he needs. If there were all the wheat that the 
world could use, its value would be much less than at 
present, and more people would be able to use wheat 
as an article of food instead of some cheaper grain. 
A high value shows great scarcity ; that there is in- 
sufficient for the satisfaction of all wants. No values 
mean abundance. High values mean scarcity. 

The popular notion that high values are desirable 
arises from the fact that each man desires a high Ex- 
change Value for what he has to sell, in order that he 
may get as much of other things in return as possible. 
Value in Use is what a thing is worth to use. Value in 
Exchange is what it is worth to sell. Now, if one has 
something to sell, the higher its value, the more of 
other goods can he get for it. Hence, each man de- 
sires that the value of his own possessions be as high 
as possible, but he also desires that the value of all 
other things which he has to buy be as low as possible. 
The things he has to sell can only have a high value 
when they are scarce. A large crop lowers the price 



VALUE EST USE. 59 

of grain ; large production reduces the value of goods, 
sometimes almost to nothing. It is certainly to the in- 
terests of the world that goods be plenty. It would 
be fortunate for us if many other necessities of life 
were as plenty as the air and water, which, although 
they possess the highest Utility, seldom have any Val- 
ue at all, simply because they are abundant. 

It is not easy for us to get this idea firmly in our 
minds, that Value means scarcity ; that is, the scar- 
city of useful things. Their Value in Use shows how 
scarce they are. Neither must we forget that the dif- 
ference between Value in Use and Value in Exchange 
is that one is what a thing is worth to use, and the 
other is what it is worth to sell, or what one can get 
for it. An article may have a very high Value in Use 
to a particular person, though he could get nothing for 
it in the market. The Value in Exchange is nothing. 
So a horse may be worth nothing to a man to use, 
since he has no use for him ; yet he may have a Value 
in Exchange, since he can be sold for something. In- 
deed, it is when the Value in Exchange is higher than 
the Value in Use of the article that exchange takes 
place. 

Measure of Value in Use. — We estimate the Value 
in Use of any particular object by comparing it with 
some other with which we are more familiar. The 
Value in Use is the satisfaction which the object 
gives to the user. He compares this satisfaction with 
that from some other object. He says : " The coat 
is worth more to me than the picture, seeing that in 
my circumstances it satisfies my wants better." In 



€0 EESOURCES FOR SATISFACTION OF WANTS. 

common language we are continually comparing the 
wants of things in this way. " This is worth more to 
me than that ; we would rather have this than a dozen 
of the other." 

An Average Value in Use. — It will readily be seen 
that the Value in Use of an object to one person is 
sometimes a hundred times as great as to another ; 
perhaps because the first has all he wants of it, and 
the second has none. Its average Yalue in Use be- 
comes the basis of Value in Exchange, and will be con- 
sidered farther on. 

Value in Use Decreases with Quantity. — It will 
also be seen that the more one has of a given object the 
less its value becomes to him, until, when he has more 
than he can use, the value of any particular portion 
is nothing. One suit of clothes is a necessity, and 
has a very high Value in Use. A second is a conven- 
ience, but has a much lower value, since one can very 
easily get along without it. Ten suits have more value 
than two, but very little more; while, perhaps, a 
hundred suits of clothing would have no more Value 
in Use to most men than ten, since ten would satisfy 
all their wants. This is also true of money, which re- 
presents all purchasable commodities. It is not true 
that a dollar is worth as much to one man as to 
another. To the laborer in a city who receives one 
dollar per day, that one dollar may mean support of 
himself and his family, and have the Value in Use of 
life itself, or of life out of the poorhouse. A second dol- 
lar per day has also a very high value to him, but not 
so much as the first. Ten dollars per day would have 



VALUE IN USE. 61 

& still higher value, since it would enable him to satisfy 
more wants ; but not five times as great a value as two 
dollars per day since the wants satisfied by the ad- 
ditional eight dollars are by no means to be compared 
with those supplied from the first two. To one whose 
income is a hundred dollars per day, an addition of a 
single dollar would have very little Value in Use, 
since the additional wants which it woidd enable him 
to supply would be of small consequence. Compare 
the additional wants which that dollar would supply 
with the food and clothing of the man who receives 
but one dollar a day. The greater one's income, there- 
fore, the less is a dollar worth to him. That is, the 
Value in Use of money, after one has a certain in- 
come, decreases very rapidly. 



BOOK II. 

POPULATION. 



BOOK II. 

POPULATION— THE NUMBER OF PEOPLE WHOSE 
WANTS APE TO BE SATISFIED. 

Introduction — The Relation of Wants to Resources is 

Shown by Value in Use, 65 

Chapter I. Population and the Resources of 

Nature, 66 

Chapter II. Population and Labor, 87 

'Chapter III. Population and Produced Wealth, . 96 

"Chapter IV. Population and Society, 103 

Chapter V. The Law of the Increase of Popula- 
tion, 116 

Chapter VI. Applications of the Law of the In- 
crease of Population, 135 



BOOK II. 

POPULATION: 

THE NUMBER OF PEOPLE WHOSE WANTS 
ARE TO BE SATISFIED. 

It is obvious that the absolute extent of the Re- 
sources for the Satisfaction of Wants is of less import- 
ance than their relative extent, when compared with 
the population. A million dollars is a large fortune 
for a single family ; it divides into ten smaller fortunes 
for ten families. If divided among a hundred families, 
they have ten thousand each. If there are a thousand 
families, it means only one thousand for each ; if the 
families number ten thousand, the million becomes only 
a hundred dollars for each. The satisfaction of the 
wants of the people depends not so much on the abso- 
lute wealth of a country as on its wealth relative to 
the number of people. 

The relation between Wants and Resources shows 
itself in Value in Use. In the last chapter, we saw 
that Value in Use always means scarcity of useful 
things ; the scarcer an article, the higher the value. 
But articles become scarce through increase in the 
number of the people, as well as by the diminution of 
the goods. Value hi Use shows the relation between 
Wants and Resources. 

(65) 



CHAPTEE I. 

POPULATION AND THE RESOURCES OF NATURE. 

It is obvious that the Resources of Nature can not 
be increased. Man has had nothing to do with creat- 
ing them, and as they were in the beginning so will 
they remain, except so far as Nature, by earthquakes, 
by upheavals, and the wearing down of the land by 
wind and rain, and the action of her own powers, 
changes them. Land, in the sense used in Political 
Economy, is nothing but the extension of the earth's 
surface, and the earth's surface can not be increased. 
The atmosphere remains the same, contaminated and 
purified by Nature's chemical laws. The water is lifted 
from the ocean's surface and blown over mountain and 
prairie, to be carried by the rivers back to the sea ; 
but the volume of water on the earth's surface remains 
the same. The forces of Nature act continually ; gravi- 
tation has pulled with the same power since man ap- 
peared, and will doubtless continue the same as long 
as the world shall exist. A few of the less important 
Resources of Nature, such as timber and wild animals, 
may be destroyed ; but no increase of Nature's re- 
sources comes with increase in population. 

Let no one suppose, however, that increase of popu- 
lation necessarily means less of the Resources of Nature 
for each one, because there is enough for a vast multi- 
tude. One can drink as much from a pitcher as from 

(66) 



POPULATION AND THE RESOURCES OF NATURE. 67 

a fountain. A mountain spring which feeds a river 
may supply a hundred families as well as one. If 
there are few people living by it, the immigration of 
several more does not mean less water for each. The 
newcomers use what before was unused. In an earlier 
day, an emigrant settled on a vast prairie, and could 
use but a small portion of the land about him. He 
Avelcomed neighbors who would take a claim next his 
own. He had all the land he wanted ; and there 
was plenty for others. The newcomers took from him 
no Resources of Nature, and added to his resources 
that of Society. 

The earth was made for a great population. It is 
to be subdued and filled with people. It may be filled, 
however, or any particular country may be filled, so 
that all the Resources of Nature are in use by some 
one. The population about the spring may be so great 
that there is not water enough for all ; and can be sup- 
plied only by bringing it from afar, either by hand 
with great labor, or by elaborate works of engineering, 
at great expense. The prairie may become so thickly 
settled that when the farmer's sons want a farm, they 
must be content with a few acres, where their father 
had hundreds. There is no more land in a State with 
ten million people than when there were only ten 
thousand. 

The Resources of Nature do not increase with the 
population. They seem unlimited so long as there is 
more than can be used ; the pressure begins to be felt 
as soon as all the land is occupied. It is a very slight 
pressure at first, and increases as the Resources of 



68 POPULATION. 

Nature appear scarce, and become more valuable with, 
the increase of population. 

Discovert. — While the Resources of Nature are no 
greater now than when man appeared on the earth, 
they were not all discovered at once. To the ancients, 
all beyond the sea was boundless speculation. Little 
by little, and again by great leaps, man has pressed on 
to see what treasures nature had for him. He discov- 
ered America. He sailed around the globe. He 
pressed far up into the frozen latitudes of the North. 
He has crossed the dark continent, and penetrated into 
darkest Africa. There is not much more for him to 
discover in the way of mere extension of the earth's 
surface. 

It is not so with the Forces of Nature. Here, in- 
deed, great discoveries have been made. The last few 
years have been a great period of discovery in the- 
methods of using power by means of electricity. We 
realize now, as our fathers did not, something of the 
magnitude of the power stored up in nature which be- 
longs to man to use. There is no reason to believe 
that discoveries on this line are at an end. 

There is much mineral wealth yet undiscovered. 
The world is waiting for a cheap method of producing 
aluminum from common clay. No one knows whether 
such cheap extraction is possible. If it is, another re. 
source of nature may be made available. 

We must distinguish sharply between discovery and 
production. The land of the world exists, whether 
civilized man has explored it or not. Minerals are 
buried in its depths, whether he has staked out his. 



POPULATION AND THE RESOURCES OF NATURE. 69 

mines or not. Natural gas filled the porous rock and 
sand a hundred years ago, as truly as when it was 
reached by the first drill. The laws which govern the 
use of electricity were the same a thousand years ago. 

.When it is said, therefore, that the Resources of 
Nature can not be increased, it does not follow that 
provision may not be made for supplying the wants of 
more people. Natural Resources may be discovered, 
and we can never tell when we have completed our dis- 
coveries. The wealth of nature is great : how great 
we do not know. It is certainly far greater than any 
one in the last century hnagined. 

A very considerable portion of the labor of the world 
is now engaged in discovery, rather than in production. 
He who finds more of nature's wealth, and makes it 
available to mankind, renders a service as truly as he 
who produces a machine from the crude iron. 

A Limit to Natural Resources. — It is evident 
that, notwithstanding discovery, there must be a limit 
to Natural Resources, though we can not with certainty 
say where that limit is. We know what we have ; 
each new discovery shows that there has always been 
something we did not see ; but discovery is limited to 
what there is to discover. When Columbus touched 
land in the Western hemisphere no one knew what 
might be found beyond the coast line. We know now 
that we have reached the limit ; that we have found, in 
outline, all the land there is to find outside the frozen 
zones. The limit to discovery was the land that 
actually existed. No explorer can find what is not 
there. The discovery of the forces of nature must 



70 POPULATION. 

be limited to the forces that exist. We simply find 
what is. 

How Many People will the Resources of Na- 
ture Support with Comfort ? — Quantity of Land 
Required for Residence Purposes. — Land is used 
for three purposes : residence, manufacturing and com- 
merce, and agriculture. It might seem to the savage 
that there could never be so many people in the world 
as to make the land required for mere residence a mat- 
ter of any consequence. But not only is the acreage 
used for residence very considerable when each has all 
he wants, but the most desirable residence land is ex- 
tremely limited. A rough measure of the land desired 
for residence is the common village lot. In cities few 
families are able to afford the land they need. In the 
country village, where land is comparatively cheap, so 
that a little, more or less, does not greatly add to the 
cost of a home, we are likely to find the average man 
using all the land he wants. The most common size of 
lots in such villages is four rods by eight (66 x 132 
feet), including, to the center of the street in front, one- 
fourth of an acre. Many residents desire acre lots. The 
amount of land one desires in a well-regulated village 
is limited by the annual expense of maintaining walks 
and streets in front, lighting streets, etc., and of keep- 
ing his own ground in proper order. One such lot is 
all that the majority of people wish to take care of. If 
we accept this common village lot as a standard, allow 
something for cross streets, park, and grounds for 
school and other public buildings, and something for 
the few families who desire larger grounds, sometimes 



POPULATION AND THE RESOURCES OF NATURE. 71 

iive or ten acres, we shall have, in round numbers, two 
thousand residences to the square mile. This is a con- 
venient, practical estimate of the amount of land de- 
sired for residence purposes by the majority of the 
people, if it costs nothing. Smaller lots than these 
bring people closer together than most of them desire 
to live. Larger lots put neighbors farther away than 
many desire, and add to the expense of maintenance of 
the ground and streets. It is to be remembered that 
this measure is not assumed ; it is the one found in 
existence in thousands of villages. It is certain that 
the average family desires more, rather than less, land 
than this. 

Two thousand residences to the square mile means a 
population of ten thousand people. Where more than 
this live within a square mile, the land is overcrowded 
for the highest welfare of all. In cities there are fre- 
quently more than ten times this number — people 
packed tier above tier, ten stories high ; but even when 
supplied with all modern conveniences, they lack the 
ground, sunlight, and the air. How desirable is a lit- 
tle land about a residence in a great city, is shown by 
the price that wealth pays for it. Grounds about a 
dwelling become a luxury which only the rich can af- 
ford. The wants of those who are deprived of them 
can not be said to be satisfied. The horrible condi- 
tion of the tenement houses of the poor in the large 
cities has been so often described that the description 
need not be repeated. Something of this is due to 
the habits of the inmates, something to poorly con- 
structed buildings ; but more to the lack of land. A 



72 POPULATION. 

little ground about a dwelling is a great sanitary meas- 
ure, even for those who care nothing for sanitary laws. 
One of the problems of the modern philanthropist is 
to break up the population of the densest portion of 
the cities, and scatter the people over a wide extent of 
country. 

When a residence district is overcrowded, the election 
of buildings becomes more costly. A two-story house 
in a village can be built at a comparatively low cost. 
Where buildings are ten stories high, foundations must 
be deep and massive, and walls heavy. They must be 
nearly fire-proof, to prevent the danger of a whole 
city being swept away in a night. When buildings 
are low and isolated, they cost comparatively little ; 
aiid the space between them, of itself, affords protec- 
tion against an extensive fire. 

In a densely populated residence district, the desire 
for land can never be perfectly supplied, and the lim- 
ited satisfaction is had at greatly increased cost. 

In round numbers, then, we may say that ten thou- 
sand people per square mile is the limit for the simple 
purpose of residence, where the desire for residence 
land is satisfied. For other reasons, people may prefer 
to live where the population is a hundred thousand per 
square mile, but at a sacrifice of the desire and need of 
land. In the Jewish quarter of New York the popu- 
lation is estimated at 330,000 to the square mile. The 
most densely populated portion of London has 170,- 
000 to the square mile. It is to be remembered, also, 
that the entire country can not be built over in this 
way. A city implies great stretches of land or water 



POPULATION AND THE RESOURCES OF NATURE. 73 

beyond, separating it from other cities. It is because 
of the free air in this open country around, that the 
densely populated city is rendered habitable. 

On the other hand, where the limit of overpopula- 
tion is not passed, a certain density of population is 
of great advantage. The anxiety of a new country 
for settlers is due in part to land speculators, but it 
is also caused by a popular appreciation of the fact 
that the presence of a considerable number of the 
right sort of people is a mutual advantage. Nearly 
all of these advantages are obtained long before over- 
crowding begins. A good public school has seven or 
eight grades below the high school. The course in the 
latter is three or four years, making from ten to twelve 
distinct classes from the beginning to the end. These 
classes can be taught to much better advantage when 
separated. In order that there may be pupils for 
classes in the higher grades, there must be enough for 
two or three schools hi the lower — at least five hundred 
pupils in all ; and seven or eight hundred could be 
taught more economically. Since more than one- 
fourth of the entire population is of school age, schools 
with five hundred pupils mean only a total population 
of two thousand, if all persons between the ages of six 
and eighteen are in school, as they should be. In a high 
school the classes should not be as large as hi the low- 
er grades, and one hundred scholars are sufficient for 
a four years' course. The number of persons between 
the ages of fourteen and eighteen, fifteen and nine- 
teen, or sixteen and twenty- — a period of four years — is 
.hout seven per cent of the entire population. Villages- 



74 POPULATION. 

of two thousand will have, on an average, one hundred 
and forty persons who should be in a high school. A 
population of two thousand is required to sustain good 
schools economically. Unfortunately, most pupils are 
compelled to leave school at an earlier age, so that a 
somewhat larger population is now required to sustain 
a good high school in an economical way. We may 
hope that the day will come, when it will be the excep- 
tion that any one leaves school under eighteen or 
twenty years of age. 

With the diverse religious views of the people of the 
United States, several churches are likely to be main- 
tained in each village or city. Any minister prefers to 
preach to a congregation of three hundred, rather than 
less. It is pretty well agreed among the clergy that it 
is better that a church consist of at least four or five 
hundred members. Some hold that larger churches 
should be divided, but no one would place the desira- 
ble limit below three hundred. To gather churches of 
this size, of even four religious denominations, means 
at least four or five thousand people. 

There is reason to believe that the fuel of the fu- 
ture, in towns large enough to sustain a plant, will be 
gas. Rock gas has shown us how convenient such 
fuel is. It is freely stated in many cities that if the 
supply of natural gas were to fail, the pipes would be 
utilized for the distribution of manufactured gas for 
fuel. The experiment of fuel gas for dwellings is sure 
to be attempted. To make its success possible, there 
must be a considerable population. Coal-gas works 
can not be erected and maintained for a few families. 



POPULATION AND THE KESOURCES OF NATURE. 75 

What is true of gas is also true of water works. Gas 
and water, distributed under pressure, are now among 
the common conveniences of modern life. Neither can 
be had in a hamlet. 

The necessity of a considerable number of people 
for the maintenance of shops, stores, and the thousand 
conveniences of a city, is apparent to all. To say just 
where the line lies between the greatest convenience 
and overcrowded territory is, of course, impossible. 
The largest city has some advantages over the next 
smaller. It must not be forgotten that many of these 
advantages belong to it simply because it is larger 
than others. The best of everything is likely to 
drift to the metropolis. If it were not half as large, 
the best would still be there, so long as there was no 
larger place. Oliver Wendell Holmes thought the 
jealousy of the country village was because the city 
drained it of its best men. It is not the absolute, but 
the relative size, that determines where the best men 
of any calling go, and there can be but one largest. 

In round numbers, we may say that a city of five 
thousand intelligent people, of the same race and gen- 
eral methods of living, make possible nearly all the 
substantial advantages which come from the massing 
of population. As good public schools may be main- 
tained as are found in the largest city, at far less ex- 
pense and risk. Churches of the more prominent de- 
nominations can be well maintained. Gas and water 
works can be economically operated. Merchants will 
not be able to keep as large a variety of some lines of 
goods, as if there were more people to sell to, but with 



76 POPULATION. 

all the more common goods they can supply their cus- 
tomers as well as any city. We have assumed an in- 
telligent American white population. Cities differ 
greatly in this respect, and there are many places of 
ten thousand inhabitants which do not afford the ad- 
vantages to be found in others of five thousand. It is 
evident that here, as elsewhere, the greatest advantage 
is found in the " golden mean," where population is 
neither too sparse nor too dense. 

Only a small part of the land of this nation is new 
required for residence purposes ; but the scarcity is no 
less real because confined to cities and towns. Some 
land is not well suited for residences. Some is much 
more desirable than other on account of natural loca- 
tion. The desire to live in cities is not alone on ac- 
count of the crowd ; it is because of the factories and 
the opportunity of obtaining employment. The scar- 
city of residence land in the city may be caused by 
artificial means ; yet with certain methods of factory 
production it is necessary to bring large numbers of 
people together during the day. They must live some- 
where, and the natural limits of residence land must 
be taken into account. The production of goods may 
be carried on with less labor in a densely populated 
place ; but, on account of the scarcity of land in that 
vicinity, the cost of satisfying the wants of the labor- 
ers is far greater. Kapid and cheap transportation, 
by which persons are carried miles away from their 
work at the close of the day, is some relief. A better 
provision is the moving of factories to the country. 

Land Required for Factories and Commerce.— 



POPULATION AND THE RESOURCES OF NATURE. 77 

The quantity of the best land for factories and com- 
merce is very limited. In a new country there may 
be water-power enough for all mills and factories. As 
population increases, the best mill-sites are soon taken. 
Where there are but few people, there is plenty of 
room in the best harbors for all ships which visit their 
coast. As the people multiply, the best wharf -groun d 
is taken ; and that must be very poor which can be 
had for nothing. Later, any land which can be made 
available, even with great expense for improvement, 
commands a high price. All this shows that, certain 
kinds of land, land suitable for manufacturing and 
commercial purposes, becomes scarcer as population in- 
creases. People must use inferior sites, or improve 
other sites at greater cost. They must do with less 
room than is desirable. It is not as easy to estimate 
the actual amount of land needed for manufacturing 
and commerce as for residence. The needed acreage 
is not great, but the acres fitted for the purpose are 
few. There are few harbors on the sea coast, and the 
wharf lines are limited. Up to a certain limit the 
pressure is scarcely felt. When that limit is passed, 
a larger population may be of advantage in some re- 
spects ; but, for this purpose, it means proportionally 
less for the people, with great danger of monopoly by 
the few. 

Land Required for Agriculture. — The larger 
portion of the land in civilized countries is used for 
agriculture. The Indian wants thousands of acres to 
roam over. In Great Britain, a considerable portion 
of the country is enclosed in parks for hunting and 



T8 POPULATION. 

private pleasure, showing the desire for great pleasure- 
grounds. This fact indicates that in the future there 
may be more great public parks for the people ; and, 
for many reasons, a larger part of the land than is- 
now devoted to that purpose, in the older parts of the 
United States, might well be maintained in park or 
forest, for the good of all. No doubt a fair satisfac- 
tion of the better wants of mankind would consider- 
ably reduce the acreage of land now used for agri- 
culture. Nevertheless, the price of agricultural land 
shows the scarcity of the more desirable portions. Al- 
though the atmosphere is essential to life, it brings no 
price, because there is more of it than can be used. For 
the same reason, land is often sold in new countries 
for less than the cost of surveying ; because there is so 
much land, and so few people. In European countries, 
it sells for what seems, to an American farmer, an ex- 
travagant figure ; because there is so little land, and so 
many people. The Western ranchman likes to meas- 
ure his ranch in square miles; the Western farmer- 
thinks a hundred and sixty acres a moderate farm. 
There are more people as we travel from the West to 
the East, with less land for each. Within a certain 
limit higher culture produces more, with less labor, 
from the smaller farm. After this limit is passed, 
although the amount of produce from an acre can still 
be increased, it is with greater proportional labor, so 
that the laborer gets less than before. This is the 
origin of the famous phrase, " diminishing returns." 

Diminishing Eeturns. — Diminishing returns does 
not mean a smaller return from land, but a smaller re 



POPULATION AN1> THE RESOURCES OF NATURE. 79 

turn from labor ; not a smaller return from labor in 
factories, but a smaller return from labor on land. 

The Western cattle king, now passing away, valued 
land very lightly. One of them, perhaps, owns some 
hundreds of acres by the streams, and has the title to a 
strip which shuts others out of a considerable region be- 
yond. He may have used Government land, pasturing* 
his herds in common with the other kings, branding 
the calves at the annual "round-up," and enforcing 
the property right of his brand with his Winchester 
rifle, and a band of determined cowboys. Not that 
he often had to fight for his rights. There was a 
mutual understanding that they were to be respected. 
The returns to labor were enormous ; the returns from 
an acre of land, very small. A dozen men could tend 
a great herd of cattle that pastured on thousands of 
acres of land. Great fortunes were made by the 
owner ; which, even if divided equally among all the 
men employed, would have given each one several 
times the compensation he could have earned in the 
older States. It is not surprising that such cattle kings 
resisted the opening of the country to settlement in 
farms of one hundred and sixty acres. 

The hundred-and-sixty-acre farmer, however, gets a 
large return from his labor compared with the five-acre 
farmer. He does not cultivate his land so well, but he 
cultivates more of it with less labor, and the total re- 
turn to him is far greater. Illinois has a reputation 
as a great corn State, but the average yield of corn 
per acre in Illinois is less than in Ohio. There are 
more acres planted. The Illinois farmer plants a field 
6 



80 POPULATION. 

of forty or eighty acres, does most of the work by 
two-horse machinery, and gets a large crop for the 
labor bestowed. The Ohio farmer plants perhaps ten 
acres to the other's forty, bestows as much labor on a 
ten-acre field as an Illinois farmer on forty acres, and 
gets more corn to the acre, but not four times as 
much. He does not get as many bushels for each 
day's work. If one asks why he does not plant more 
acres, the obvious reply is that he has no more acres 
to plant. The price of land is so much higher than 
in Illinois that he can not afford to buy more. There 
are more people, more farmers, with less land for each. 

To the English farmer it is a surprise to see land in 
Ohio cultivated so poorly. American farming appears 
slovenly. The reply is, it pays better to work more 
land than to give the high English culture. The 
American farmer gets a greater return for his labor, 
but not so much from an acre of land. 

It is a sort of stock argument with some that we 
ought to cultivate our land better. Part of the ap- 
parent force of this statement lies in the pride of a 
nice farm. A farmer owes it to his neighbors to keep 
his farm in good order, and to keep down unsightly 
weeds, whether it pays or not. It is also true that, 
up to a certain limit, more labor, better cultivation, 
pays. If the average production of wheat be fifteen 
bushels per acre, it is possible that if one will bestow 
twice the labor, and double the cost of fertilizers, etc., 
he can get thirty bushels. That is, without regard to 
the price of his land, by doubling the cost of production 
he can double the product. But how is it, after he 



•POPULATION AND THE RESOURCES OF NATURE. 81 

reaches tlie thirty-bushel product ? If he now doubles 
"the labor on a single acre, will he get sixty bushels ? 
If so, would again doubling the labor on an acre bring 
a hundred and twenty bushels ? Every farmer can 
tell the foolishness of such an attempt. He will point 
to a slovenly farmer, who gets half a crop ; and say 
that if that man would work twice as hard he would 
get twice as much off his land ; but when one has al- 
ready brought his land up to a certain state of cultiva- 
tion, which, in this country, is called good farming, it 
is impossible to get increased returns in proportion to 
the increase of labor and cost. Every good farmer 
knows that more work will bring better crops, but not 
in proportion. Doubling the labor and expense may 
increase the crops twenty-five or fifty per cent.; but it 
is more profitable to work more land. 

So much effort has been made to break the force of 
this obvious truth — as certain as the axioms of geom- 
etry — that we can afford to look at it from another 
point of view. A good American farmer who owns 
■one hundred and sixty acres of land is visited by three 
Englishmen, who tell him that he does not work land 
as they do in England, and that it would pay him to 
cultivate it better. They propose that he divide his 
farm among the four ; he to retain the forty acres with 
dwelling house and buildings, and to give them forty 
acres of bare land apiece. Say they: " Now, you just 
put as much labor and capital on this forty acres as 
jon have on the one hundred and sixty, and you will 
make as much money, and we will all have a farm 
apiece." An American farmer would not be caught 



82 POPULATION. 

with this chaff. He knows he could get more off any 
forty acres of his farm, but not four times as much. 
If he is a good farmer, he has cultivated his land 
nearly up to the point of diminishing returns ; that 
is, additional labor and capital applied to his land will 
not bring as great a return as that now bestowed. It- 
would pay him better to work more land, provided the 
additional land could be had for nothing. 

Whenever an accurate calculation shows that it will 
pay better to cultivate additional land, rent free, than 
to put more work on that under cultivation, the point 
of diminishing returns has been reached. 

The limits of diminishing returns may be reached 
in one country, but not in another ; in one State, but 
not in the entire United States. The only thing that 
is sure is, that there is a limit to the returns to labor 
on agricultural land. When it is passed, land is be- 
coming scarce in proportion to the population. It may 
support twice the present number of people, but at an 
increased cost of labor. A point would be reached— 
has been reached in many countries of the world — 
where the average man must be content with less food, 
or poorer food and clothing, than if there were fewer 
people for the land to support. Like Lot and Abra- 
ham, the land is not able to bear them. The remed}^ 
at that time was emigration. It is the remedy which 
the Old World is trying, in shipping to us its surplus 
population. 

Calling a Farm by Some Other Name. — The 
last attempt to break the logic of the law of diminish- 
ing returns is to call a farm a factory. There are 



POPULATION AND THE RESOURCES OF NATURE. 83 

some people who take great delight in calling a thing 
by some other name, with the idea that the change of 
name will change the thing. The object in calling a 
■farm a factory is to assume that agricultural produce 
can be manufactured like cotton cloth, at less expense 
for large quantities than for small. The suggestion 
is to use fertilizers of the highest strength, containing 
i;he elements of the crop to be raised. One Frenchman 
proposes to warm the soil by buried steam-pipes, and 
to transform the whole land into a reeking swamp of 
the torrid zone. The answer is that, even if the law 
of diminishing returns did not apply here, as it does, 
there is a limit to the power of the air and the sun- 
light. We may have a few city hotbed vegetable gar- 
dens, because of the wide expanse of country between. 
The air sweeps over the prairie and the farm, and its 
volume is sufficient to purify the city, and for the 
hotbed garden. There is a limit to the amount of con- 
centrated fertilizers, and decaying vegetable and ani- 
mal matter, that may with impunity be heaped on a 
given space of ground, and transformed into vegeta- 
tion. The experiment of sewage farms has been tried 
as a means of disposing of the sewage of cities ; the 
growth of vegetation is rank and unfit for human food ; 
where it has been fed to cows, there have been serious 
doubts of the wholesomeness of their milk. It is a 
good way of disposing of the sewage of a city, but it 
woidd be most unfortunate if the whole country were 
transformed into one vast sewage farm. Great spaces 
of clear, open country are needed for the sake of 
densely populated cities — spaces occupied by ordinary 



84 POPULATION. 

farms, with nature's methods of production, not forced 
much beyond that of the English agriculture. 

It is impossible, however, to increase the production 
of land, even by the most artificial means, beyond cer- 
tain limits, without increasing the cost of production. 
It is impossible to get rid of the law of diminishing 
returns. There is a limit to the number of bushels of 
wheat that can be raised to the acre, even though the 
ground be heated by steam-pipes, and overcharged 
with fertilizers, until the grain is unfit for use. When 
the limit is reached, the wheat will be produced at ten 
times the cost to a Dakota farmer. 

All improvements in agriculture are to be welcomed.. 
The limitations imposed are found in the extent of the 
earth's surface, the air, the sunlight, and the natural 
forces. The earth might have been larger than it is. 
The extent of land might have been greater, and that 
of water less ; but we have only so many square miles, 
only so many acres, in a given division. The earth is 
large enough for vast multitudes, for numbers of which 
no man can form a vivid conception ; but it would be 
foolish to shut our eyes to the limits of the land and 
its productive capacity. 

The consideration of the law of diminishing returns 
has been a little tedious to the reader, yet it was 
scarcely possible to make it shorter or simpler. With- 
out an understanding of it, we should make great mis- 
takes. Ignorance of this natural law has permitted 
many intelligent men to fall into laughable absurdities. 

Value in Use of the Kesoukces of Natuee. — 
The Value in Use of land is determined by the num- 



POPULATION AND THE RESOURCES OF NATURE. 85 

ber and character and condition of the people who de- 
sire to use it, or on whom its use depends. The land 
on which the city of Chicago stands was a few years 
ago worthless because there was nobody to use it. 
There was a vast unoccupied territory to the west of it. 
There were a few settlers, but the land had no value, 
because value means scarcity. As soon as this Western 
land was occupied, there was need of a commercial 
metropolis, and the natural place for this is a harbor 
on the lake. The site of Chicago now comes into use 
because of the people west of it. Very little value is 
given to any particular city lot by the improvements 
on that lot itself. The value comes from the people 
who live on other land about it. Improvements on one 
lot give value to others in the neighborhood, because 
they ensure a large and better population. 

The value of land is not determined alone by the 
population immediately about it, but often by that 
thousands of miles distant. The value of land in the 
Dakotas is influenced by the number and character of 
the people hi London. Dakota land has the utility of: 
producing wheat, but would have no more value than 
water unless there were people to eat that wheat. The 
population of the British isles thus increases the value 
of land in Dakota. Were there fewer people in Eng- 
land, or were they unable to afford wheat as an articles 
of diet, there would be no foreign demand. With the^ 
present state of commerce, the value of land is often 
affected by the population of very distant places, and 
by the convenience of communication and transporta- 
tion. Land is no longer scarce or plenty with sole. 



86 POPULATION. 

reference to the people in the immediate neighborhood. 
It may be scarce with reference to those who draw their 
supplies from it half way round the globe. The value 
of the land suitable for raising tea in India and China 
and Japan, will be affected by the number of people 
in the entire earth, and by their tastes ; that is, their 
wants. The question is not, Is such land scarce with 
reference to the people in India ? but, Is it scarce with 
reference to the people of the earth ? The value of any 
given piece of land is the scarcity of that kind of land, 
or of land which people like as well as this ; and its 
scarcity is caused by the number of people who want 
it. Utility of land remaining the same, it becomes 
valuable in proportion to its scarcity, and its scarcity 
is increased with the number of people dependent on 
it, and with the development of their wants. 

Value of Other Natural Eesources. — Fortu- 
nately, most of these are so plenty as to have no value, 
either in use or exchange, except under unusual cir- 
cumstances. In the well-known story of the Black 
Hole in Calcutta, there was not air enough for all the 
prisoners ; and those who got the little there was lived, 
while the others died. The utility of air was no greater 
than before, but its scarcity gave it the value in use of 
life itself. The atmosphere is often injured by the ex- 
halations from swamps, or the products of factories. 
Here pure air, if it could be furnished, would have a 
Value in Use. 

Wild animals, timber, and other useful natural ob- 
jects, may become valuable as population increases, 
through their scarcity. 



CHAPTER H. 

POPULATION AND LABOR. 

The Resource of Labor, or rather of the ability to 
perform labor, differs from the Resources of Nature 
in almost every respect. It is embodied in the people 
whose wants are to be satisfied. One of the mistakes 
of the orthodox English school of political economy, 
which has done so much for the science, is in consider- 
ing Labor too much as a machine, or as something apart 
from the people. It was, of course, assumed that the 
laborer must eat and be clothed, but the steam-engine 
must also be supplied with coal, and there was an un- 
conscious tendency to treat of the laborer as if he 
were an engine rather than a man. This tendency 
was not because of any heartlessness on the part of 
the investigators, many of whom would have given 
their own lives for the welfare of humanity ; but was 
rather the result of incorrect methods of study, and a 
mistake in the definition of the subject on which they 
wrote. We are to keep in mind the fact that we are 
dealing with men — men with wants and power to 
labor, both embodied in the same individual. We can 
not separate the laborer from the man whose wants are 
to be satisfied. We may consider, now his power to 
labor, and again his wants as man ; but in each case 
we are to remember the other. 

The resource of Labor differs from the Natural Re- 
(87) 



00 POPULATION. 

sources in that it can be increased. "We see that there^ 
is no more land in the world to-day, no more air, water, 
or minerals, than there were thousands of years ago. 
There will be no more thousands of years hence. The 
extent of the Resources of Nature is entirely unaf- 
fected by the increase of population. But the in- 
crease of population is likely to bring more laborers 
into the field. The more people, the more there are 
to work; and there is no reason why the ability to 
labor should not keep pace with the increase of popu- 
lation. If the islands of Great Britain were so full 
that there was not room enough in all the land for a 
house for each family, there would be great scarcity of 
Natural Resources (in fact, people would die off long- 
before that point was reached), but there need be no 
scarcity of labor. Labor would be a drug in the 
market ; there would be more of it than could by any 
possibility be used. Land, air, sunlight, water, the 
products of the soil — all these would be at a premium. 
We are always to guard v against the mistaken notion 
that any one resource is sufficient for the satisfaction 
of wants. To Adam Smith belongs the glory of 
bringing into clearer light the importance of Labor, 
and it has since been the basis of many a treatise on 
Political Economy. But any system, of economics, 
built on Labor alone is false, because Labor alone is. 
useless. So, Natural Resources without Labor are 
useless. Each is like the half of a pair of shears — 
they must be riveted together. 

But because the ability to labor may be expected to- 
increase with the increase of population, it by no> 



POPULATION AND LABOR. 89 

means follows that it always does so. The ability of 
any nation to labor is never in proportion to the num- 
ber of its people. It is the sort of men, rather than 
the number of men, which determines the power of a 
nation. If the reader will recall what was said in an 
earlier chapter, he will at once see how little the num- 
ber of people, and how much the character of the 
people, has to do with determining a nation's ability 
to do. It is not so much the mere muscular power as- 
the vital energy, which determines its use. Even in 
this respect, a good American workman is worth five 
or ten times as much as the men of many nations of 
the earth ; but in intellectual power, the power of 
adapting means to ends, power of inventing, ability 
to use the Resources of Nature, he may be worth 
hundreds or thousands of indolent Africans. 

We may imagine, therefore, the population of a 
country to remain stationary, as does that of France, 
and the power of labor to increase with great rapidity, 
perhaps to be multiplied many times during a single 
generation. Let us suppose a few hundred thousand 
people, for convenience, isolated on an island. They 
are people of the average ability of those in the 
United States, and are living as we do here. Let it 
be agreed that every boy and girl shall receive the best 
training and education that can be had from the most 
competent instructors in the little nation. There are 
manual training schools, apprenticeship in various 
trades under the workmen most competent to teach, 
intellectual culture — in short, all is done that can be 
done for the development, education, mental, physical,. 



90 POPULATION. 

and technical training of each child in the State. Who 
can doubt that the ability of the second generation to 
labor would be double that of the first, though its 
numbers should be exactly the same ? There would be 
some increase in the average physical ability, in mus- 
cular power and vital energy; but this would be 
of little consequence compared with the general and 
technical knowledge — the knowing how. Even the 
latter would be small in comparison with the enormous 
power of invention which would follow so general edu- 
cation, by means of which the Resources of Nature 
would be used to better advantage, and results accom- 
plished beyond the power of any number of ignorant 
though muscular men. Labor is something more than 
muscular exertion. Some one has said that it consists 
in moving things. It would be nearer the truth to say 
it consists in moving things to the right place. Know- 
ing what is the right place, and the method of moving 
with the least exertion, is the greatest part of it. On 
the other hand, the population might be doubled by 
the immigration of Poles or Italians, but the power of 
labor would not be proportionally increased. 

It is not alone the efficiency of the laborers, but 
the proportion of laborers to idlers, that must be taken 
into account. In some nations, at some times, labor 
has been counted a disgrace. The citizen lived for 
war, the hunt and chase. Even at the present day, in 
European countries, there is a class of wealthy men 
who do little toward the satisfaction of wants, and 
procure the services of others, by inherited fortunes. 
Even in this country, we sometimes hear it regretted 



POPULATION AND LABOR. 91 

that there is no leisure class ; that is, no idle class. 
This is partly because we are a new country, and pop- 
ulation is not yet too dense. There is still among us 
a respect for the man who works by hand or brain. 
Our most honored citizens have been great lawyers, 
great physicians, great preachers, and men who have 
conducted large business enterprises. In England, 
the most learned physician and the most successful 
business man are held to occupy a position decidedly 
inferior* to that of an idling nobleman, living on the in- 
heritance of the past or debts contracted in the pres- 
ent. There is a decided tendency in this country 
toward the same condition of affairs; but, neverthe- 
less, a larger proportion of our people are engaged in 
some form of active employment than in any other 
nation in the world. 

The power of labor in a nation, other things being 
equal, is greatest when the largest number of people 
work. The power of labor in a new country, such as 
a newly settled State in the West, is likely to be 
greater than in an older country, because a larger pro- 
portion of the people are actively employed. Many of 
the brightest and most intelligent young men go West. 
The older, and those unable to endure hardships, are 
more likely to remain at home. A population com- 
posed entirely of men and women between the ages of 
twenty and fifty, in vigorous health, with high physi- 
cal and mental powers, would have abundance of la- 
bor ; perhaps two or three hours a day would be suffi- 
cient to secure to all a fairly comfortable living. 

With a population of which one-third are children, 



92 POPULATION. 

a considerable portion aged, a large number sick or 
feeble, some intellectually incapable of making labor 
effective, and a certain percentage who refuse to work 
because possessed of sufficient property to employ oth- 
ers as servants — we have the effective working force 
greatly reduced, and consequently more hours of la- 
bor are required. 

The relation of population to labor may be summed 
up by saying : Labor naturally increases or decreases 
with the population, but depends on the physical and 
mental ability of the people, and the proportion of the 
entire population which is engaged in active work. 

The ability of a nation to labor should increase 
much faster than the population, because of the better 
education and technical training of each new genera- 
tion, and the experience it has gained from the past. 
The time will undoubtedly come when we shall consid- 
er the first twenty years of life as sacredly set apart 
"to education ; when public opinion will not tolerate the 
support of parents by minor children ; when the State 
will see that the period of natural growth is used to fit 
the man for the active work of life. Not that chil- 
dren will do no work ; but only so much as is an aid to 
education, and the learning of a trade or business. 

Value of Labor. — Labor is seldom so plenty as 
to have no value, because most men dislike to work. 
When labor has no value, they will not work, and 
hence the labor offered becomes scarce enough to give 
it a value. One of the wants we have to satisfy is 
that of a desire for leisure, and the satisfaction of 
this reduces the available labor power. Hence, labor 



POPULATION AND LABOR. 93 

that can be had for nothing, that will be put forth 
whether the man gains anything or not, is so little 
that it is very scarce as compared with the work to be 
done. If there were so many men who preferred work 
to idleness that there was nothing for all of them to 
do, labor would have no value at all, though the utility 
would be the same as at present. Such instances are 
occasionally found. There are just enough of such 
laborers to make the principle clear. There are a 
great many people who write very fair poetry, who 
find so much pleasure in writing it, and seeing it in 
print, that they prefer to do this kind of work to 
doing nothing. This grade of poetry has a certain 
utility. A limited amount of it is printed in various 
newspapers, but the work possesses no value, because 
it is not scarce. Poetry of a higher grade, such as 
Whittier wrote, is scarce. It has, of course, a much 
higher utility, but it has value also, because of its 
scarcity. 

Value to the Laborer. — The foregoing has reference 
to the value of the results accomplished, but there is 
another side, which is the laborer's side. It is the 
value of labor to him, or rather the value of freedom 
from toil. Certain kinds of labor are disagreeable, and 
would be done by no one if it were not to satisfy some 
want of his own, or to obtain a reward from others. 
Nearly all forms of labor are disagreeable when carried 
"beyond a certain number of hours per week; so that 
the laborer, in endeavoring to satisfy his own wants, 
finds that one of those wants is freedom from exer- 
tion. He who has inherited a fortune which gives him 



94 POPULATION. 

control over the labor of others, may spend his time,, 
not in idleness, but in systematic pleasure-seeking. If 
he labors, it is in some special ways. He does work 
which he enjoys, or labors from benevolent motives 
in order to benefit others. It is true that many 
wealthy men seek to increase their fortunes for vari- 
ous reasons, among them the mere love and satisfac- 
tion of increasing them ; but the labor they perform 
is of the kind they enjoy, although it may not seem 
desirable to others. Most men work more than they 
wish to. The value of labor is precisely the value of 
ease. In considering whether he will work a day for 
a certain reward, a man asks himself whether he pre- 
fers it to a day of leisure. Men and nations differ 
greatly in this respect. Some would prefer a certain 
number of hours of labor during the year to freedom 
from toil. They are conscious that work is good 
for them, that they are better off with a reason- 
able amount of it than with idleness. The English, 
Americans, and Germans are types of laboring na- 
tions ; there are other natural loafing nations, such as 
the Turks, native Africans, and, in general, people of 
lower civilization. They love idleness, and value their 
leisure very highly. They must have sufficient food to 
prevent starvation, and clothing enough for bodily pro- 
tection, and will therefore work a little to preserve 
life ; but anything further seems to them a less good 
than ease. Among them labor has a very high value, 
because there is so little of it ; their laziness makes it 
very scarce, and the amount of work performed is very 
small in proportion to their needs. 



POPULATION AND LABOR. 95 

Labor, from the point of view of the laborer, fol- 
lows the same law as other values, so fully illustrated 
before. Its disagreeableness increases very rapidly 
with 'its quantity. 

Value in Use shows the relation between Wants and 
Resources. In the case of Labor, value shows the re- 
lation of the labor power of the population to the 
wants of the population. If people are naturally in- 
dolent, labor power is small in proportion to wants, 
and the value of additional hours of work appears to 
them very great. On the other hand, their labor 
power may be far in excess of their wants, so that 
they would willingly assist a neighbor, and the value 
of labor would be very low. The value of labor is 
probably higher among civilized nations at the present 
time than ever before, because of the great increase of 
wants ; so that labor is actually scarce in proportion 
to the wants it has to satisfy. 

The actual power of labor should be raised to its 
highest point through the development of the indi- 
vidual, and the increase of skill and knowledge. The 
wants of the people should not increase beyond a. 
point which will require reasonable exertion from the 
great mass of the population. We may assume that, 
it is desirable that men should have great skill and 
knowledge, and great labor power, and that wants, 
should increase to the point which will demand such 
laborers. Such a race of men will certainly rank far- 
above those whose wants are fewer, and powers of 
labor less. 



CHAPTER III. 

POPULATION AND PRODUCED WEALTH. 

Produced Wealth has no such relation to population 
as has Labor. Labor is embodied in population ; Pro- 
duced Wealth is entirely independent of the number 
of people. It may increase with great rapidity when 
population is decreasing, or it may decrease with great 
rapidity when population is increasing. 

How Much Produced Wealth is Needed? — 
As with Natural Wealth, it is well to inquire how much 
Produced Wealth is needed by a given number of peo- 
ple. At first it would seem that there could not be 
too much ; but it is evident that we require only a lim- 
ited quantity of various classes of goods ; but that 
without a certain quantity of these goods, proportional 
to the number of people, either want or great suffer- 
ing must result. Indeed, it is impossible to maintain 
.a large population except by means of vast accumula- 
tion of Produced Wealth. 

It will be more convenient to notice, first, that 
which satisfies wants directly. The quantity of wheat 
which can be eaten in a single year is limited ; per- 
haps three hundred and fifty million bushels is suffi- 
cient for all the people of the United States. Fortu- 
nately, this grain can be stored and carried over into 
the next year, with some expense ; but there is no 
great advantage in a large supply at the beginning o£ 

(96) 



POPULATION AND PRODUCED WEALTH. 97 

."harvest. Fruit has, however, often been suffered to 
rot on the ground, because there was more than the 
people could use. The quantity of clothing required 
by a nation is also limited. There is no great advan- 
tage in a stock sufficient for more than a year ; it is 
better that it be produced as needed. The same is 
true of dwellings. One or two houses is usually all 
that a family desires. If we have a house for each 
family, we may need better dwellings, but not more. 

This is one side. On the other hand, if there is too 
little of any of these goods, or, what is the same thing, 
too many people in proportion to them, there must 
be suffering. No matter how great the Natural Re- 
sources ; no matter how great our labor power — we are 
compelled to produce for the future rather than the 
present. Most production requires a year. Unless 
there is food enough to last until the next crop ripens, 
there must be suffering, no matter how large a crop 
may be anticipated. When a shipload of immigrants 
lands, they require shelter at once. They could not in 
a densely populated country build them houses, from 
the beginning, in much less than a year. In a new 
timbered country one could, with the aid of his neigh- 
bors, roll up a very comfortable log house in a few 
days ; but not in New York City or its suburbs. One 
wants clothing to-day ; it will take a long time to raise 
a flock of sheep, shear the wool and manufacture it 
into cloth. He can not raise a crop of cotton and turn 
it into cloth except with many months' labor. We 
need a vast stock of all this sort of wealth to supply 
the people until more can be produced. The quantity 



98 POPULATION. 

required is not unlimited ; it bears a certain relation to> 
the population. 

The articles of luxury which a given population 
needs are not limited in number, or in the labor which 
can be bestowed in their production ; but the quantity 
of each sort of goods desired is limited precisely as in 
the instances before enumerated. Only a certain num- 
ber of pianos are wanted ; although many persons 
would desire a better instrument. As a nation grows- 
wealthy, the variety of articles of luxury and of art 
greatly increases ; and better quality is sought for. It 
is seldom that there is enough of these forms of Pro- 
duced Wealth for all the people. In some periods, and 
among some peoples, wants have been more nearly sat- 
isfied than at present, because the wants were fewer. 
With the general increase of intelligence and culture,, 
the desire for articles of luxury has greatly increased ;. 
and the ability to make use of costly productions is. 
vastly greater than ever before. Wants have, per- 
haps, developed more rapidly than the means for their 
satisfaction. With the standard of living desired by 
educated and cultivated people, the quantity of Pro- 
duced Wealth required to satisfy wants is so great that 
it has never been, and perhaps never can be, sufficient 
for a great population. 

The most common type of Produced Wealth which 
satisfies wants indirectly, is machinery. Its purpose is 
to aid in the production of something, such as clothing, 
which can be used to satisfy wants, directly. While- 
there is need of a great deal of machinery and many- 
factories in the world, the factories for the production 



POPULATION AND PRODUCED WEALTH. 99 

<of any one article are limited by the population of a 
nation, or the market in foreign nations. There can 
•easily be enough cotton factories to produce all the 
-cotton goods that can be worn in the United States. 
There can be as many railways as are needed. Some- 
times a single railway between two points could act- 
ually handle all the business at less cost than two. 

A large population, however, needs a vast amount 
<of machinery, railroads, etc., and could not be sus- 
tained, with even the modern comforts of the poorer 
classes, without it. "Without machinery and factories, 
a considerable portion of the American people would 
perish, and the greater portion of the remainder be re- 
duced to the condition of the poor in the middle ages. 
It is evident that the larger the population, the more 
machinery and factories are needed. 

The limit of profitable accumulation of machinery, 
satisfying wants indirectly, is greatly increased with 
each new invention. It is possible for the world to be 
a great deal richer in proportion to the population than 
it was a generation or a century ago. What could the 
world have in early times ? Flocks of sheep, herds of 
cattle, castles, dwellings, and a little rude machinery 
and works of art. Many utterly useless things, such 
as the pyramids, were produced with great labor. 
With the progress of invention, vast wealth is profit- 
able in the form of machinery, and the importance of 
Produced Wealth is greater than ever before. 

It is evident that population can not increase beyond 
.a certain ratio to the Produced Wealth of the land. 
If there are too many people, some must starve, no 



100 POPULATION. 

matter how great the Natural Resources and the power 
of labor. Some may starve while others have an. 
abundance, or all may be on short rations, but the 
weakest or poorest must finally die of hunger. The 
desirable state of affairs is that there shall be enough 
for the common wants of all. 

Value of Produced Wealth. — Produced Wealth 
is not permanent. Time destroys it all, or it is main- 
tained in its original condition only by constant labor 
in repairs. When destroyed, it can also be replaced. 
Were it not that men are looking forward to this de- 
struction and replacement, its value would be deter- 
mined entirely by its scarcity. If there were more 
dwellings than people could use, they would have no 
more value than mountain scenery. If there were 
more clothing of a certain kind than people could 
wear, it would have no more value than the water of 
the river. It would be as useful as before, but, like 
the water, being no longer scarce its value has de- 
parted. People look forward to further production ; 
they know that, however great the stock of clothing 
in the United States may be, it will all be worn out. 
in a few years, and that more must be produced. 

When Produced Wealth is scarce, in proportion to> 
the population, and its value therefore high, every ef- 
fort will be made to increase it. In this respect it 
differs from Natural Wealth, which can not be in- 
creased. When any form of Produced Wealth is so 
abundant that its value is low, production is dimin- 
ished, and the stock is reduced by consumption. 

All Produced Wealth is the result of savino-. As. 



POPULATION AND PRODUCED WEALTH. 101 

it is a common saying, "It is not what one earns, but 
what he saves, that makes him rich ; " so it is not 
what society produces, but what it saves, that consti- 
tutes the vast resource of the productions of human 
industry which were classified in an earlier chapter. 
A nation may consume during* a year the total pro- 
duction of all its people. Here, there is no saving, 
and no increase in Produced Wealth. The people may 
even eat up and wear out the stock of goods saved 
over from former years. The stock of goods deterio- 
rates by mere lapse of time, and, unless replaced from 
year to year, will naturally diminish ; buildings grow 
old and fall into decay ; machinery rusts out, as well 
as wears out. Nothing remains as good as new, even 
if unused. 

There are two principal causes which promote sav- 
ing and the increase of Produced Wealth. The first 
is the desire for a provision for the future. One lays 
by for a rainy day, for the time of sickness, for a year 
of failure of crops, for old age. This desire to save 
varies greatly with different people and different na- 
tions. Where it is strong, the stock of the produc- 
tions of industry is certain to be large, because people 
will live in some way, and save a portion of what they 
get. Opportunities for saving, such as building and 
loan associations, a postal savings-bank, the purchase 
of a piece of property to be paid for in the future- — 
all promote habits of saving on the part of the people. 
It is sometimes said that certain men did not begin to 
grow rich until they ran in debt ; the reason being 
that they saved what before they spent on themselves 
or families. 



102 POPULATION. 

The second cause of saving is the need of some form 
of capital. A workman or a manufacturer sees that 
lie could succeed better by the aid of new machinery, 
and saves to buy it or to pay for it. 

While it is true that Produced Wealth is always the 
Tesult of saving, it would be equally true to say that 
it is usually the result of extra labor. An easy-going 
settler in the West, living in a sod house or dug-out, 
finds himself just able to make both ends meet in pro- 
viding for himself and family. If, now, himself and 
boys were to work more hours a day, and in the extra 
hours mold and burn brick from the clay on his farm, 
and afterward lay them in the walls of a house with 
their own hands, they might have a better dwelling as 
a result of extra labor. It would, of course, be sav- 
ings, since they might have used this extra labor to 
produce some luxury to eat or to wear. But it is 
directly the result of additional labor. This is prob- 
ably true of the greater part of all accumulations of the 
productions of human industry. Most men naturally 
consume all they produce, or get possession of. When 
they realize the necessity of saving something, of some 
capital or machinery to use, or of a house to live in, 
they get it rather by additional labor than by saving 
out of present products. 



CHAPTER IV. 

POPULATION AND SOCIETY. 

Society, like labor, is embodied in population. The 
number of people in whom one can be personally in- 
terested is very limited. A traveling man once stated 
that he knew twenty-five hundred physicians, whom he 
could call by name. Few individuals have the capac- 
ity to remember so much about so many people. An 
acquaintance with a few hundred is all that most per- 
sons care for, or are able to keep up. There is, how- 
ever, a desire for the presence of a much larger num- 
ber than one can become personally acquainted with. 
We like to see a crowd on the street or at a place of 
entertainment. Part of the pleasure of a lecture comes 
from the hundreds, or thousands, who may be in the 
same room, in sympathy with each other so far as the 
common object of the evening is concerned. There is 
a satisfaction in numbers, in the consciousness that 
thousands are enjoying the same magazine, or book, 
that we are reading. Even without a personal ac- 
quaintance, we may have a general knowledge of men, 
and may be in sympathy with vast numbers. The 
world would not be as satisfactory as it is, if the num- 
ber of people were limited to those we could person- 
ally know. 

It has also been said, in an earlier chapter, that a 
large number of people is necessary in order that pro- 

(103) 



104 POPULATION. 

duction may be carried on to the best advantage, and 
wants satisfied in the most economical way. It is im- 
possible, with all the resources at the world's com- 
mand, to satisfy wants without a division of labor. 
Undoubtedly a very considerable division of labor 
could be had in a community of a few thousand peo- 
ple. There would be farmers, carpenters, blacksmiths, 
physicians, teachers, merchants, etc., and the division 
might be carried far enough to give more than half 
the advantage enjoyed at present. By means of for- 
eign commerce the division of labor may include all 
the world, so that even a small nation may reap the 
advantages of it. 

It should be understood that, in this respect, numbers 
satisfy wants by their presence, not by their efforts. 
This is the distinction between Society and Labor. 
Looked at as laborers, people satisfy their own wants,, 
and aid in the satisfaction of the wants of others. 
Looked at as society, others unite with us in desiring 
the same goods, and creating a demand for large quan- 
tities. A thousand people need a thousand times as- 
much as one, and the supply for the thousand may be 
produced at one-tenth the cost to each individual. In. 
many instances the saving is even greater. The cost of 
a certain weekly newspaper exceeds five hundred dol- 
lars a week before a single copy is printed. If such 
a paper were produced for one man, a wealthy prince,, 
it would cost him at least twenty-five thousand dollars 
a year. It is furnished to its subscribers at four dol- 
lars. Its publication is possible only because thou- 
sands of people want it ; but this means a population 



POPULATION AND SOCIETY. 105 

of millions. One could hardly afford to cultivate his 
voice for a lifetime to sing to one person ; but if he is 
to sing to thousands, each listener may enjoy the pleas- 
ure, and the cost for all not greatly exceed that for 
an audience of one. Most of the common comforts 
and luxuries of life are furnished as cheap as they are,, 
because produced in large quantities. 

It is the wants, and not the number of people, that 
make a demand for large quantities of goods, and 
their cheap production possible. If only one person 
in every hundred thousand desired a particular book r 
there would scarcely be a demand for seven hundred 
copies in the United States, not enough to pay for 
publication. If one person in every hundred wishes- 
the book, it would require a nation of only a hundred 
thousand people to take a thousand copies. The pres- 
ence of Italian " dagoes " does not add at all to the 
demand for the rarer articles. For the common pro- 
ductions, such as sugar, shoes and cotton, the demand 
of a single million people is enough to make produc- 
tion economical. It is the number and character of 
the tocmts, and not the number and character of the 
people, we are taking into account in estimating the 
advantage of Society. A large variety of wants em- 
bodied in few people (provided we have the means of 
production) are just as advantageous in affording a 
large market as the same number of wants with a 
larger population. To make this clear, suppose two 
countries, one with a million people, the other with 
ten millions. Let us suppose that by reason of su- 
perior intelligence, knowledge and self-control, the 



106 POPULATION. 

labor power of the one million is as great as that of 
the ten millions. This is no unreasonable supposition. 
A million picked men of the United States would have 
as great labor power as fifty million native Africans. 
Let us also suppose that the wants of our nation of 
one million are as numerous, and as great, as those of 
the ten millions. This, also, is no unreasonable suppo- 
sition. They can not eat ten times as great a quantity 
of food, but they will desire a greater variety of food, 
which may require as much labor power to produce. 
They may actually wish ten times as much clothing. 
They will wish many things, such as pianos, that the 
savages do not care for. We assume that they are 
homogeneous, of comparatively like tastes, so that a 
considerable portion of the people desire the same 
class of goods. Now, by our supposition, the labor 
power of the two nations is equally great, the sum of 
the wants is equally great; hence goods can be pro- 
duced in as large quantities in the one nation as in the 
other. The advantage, indeed, is on the side of the 
civilized nation. It does not take a very large number 
of people to cause a demand for the common necessa- 
ries of life, since every person wants the same thing in 
nearly the same quantities. Every person uses sugar, 
shoes and wheat. Ten thousand families are enough 
to give employment to several men in raising wheat, 
even with improved machinery ; and it could be pro- 
duced, if there were only ten thousand families in the 
world, without very much more labor, per bushel, than 
at present. A very small and thinly settled country 
has people enough to make possible the production on 



POPULATION AND SOCIETY. 107 

a large scale of the common necessities of life. When 
it comes to the more costly comforts and luxuries, the 
demand is from a very small percentage of the people. 
The higher the civilization, the larger the proportion of 
the population which wants them. We may imagine 
a nation so well educated that every family will desire 
the best books, and the highest class of magazines, 
with all the comforts of a well-to-do family of the 
United States. With such a civilization, there may 
be in a country of fifty thousand people as large a de- 
mand for the rarer kinds of goods as would exist 
among five million Poles with a few American over- 
seers. Many persons want these things who can not 
get them, but they will never be produced until people 
desire them. Compare the wants of a tribe of Afri- 
can savages, or of an Indian tribe, with those of a 
merchant or mechanic in the United States ! 

While, therefore, the presence of a considerable 
number of people is desirable, there is a limit to the 
number required by the need for Society. A hundred 
million persons may afford no better opportunity for 
the economical satisfaction of wants than ten million. 
Indeed, there is reason to believe that a population of 
one million highly cultured people would afford op- 
portunity for carrying the division of labor as far as 
is for the advantage of the race, and give, practically, 
all the economic advantages to be had from large 
numbers. Both their wants and their labor power 
would be from ten to fifty times as great as those of an 
equal number of savages. They would gain greatly 
by exchange with other nations, in articles which 



108 POPULATION. 

could be better produced elsewhere. There will al- 
ways be some things in the production of which some 
one nation will have a decided advantage. But in the 
satisfaction of most of the wants of its people, it is 
probable that, leaving out advantages of climate and 
soil, a nation of one million people of the highest in- 
telligence and knowledge, would be able to reap so 
nearly all the advantages of a division of labor that 
the rest can be safely disregarded. The difference be- 
tween one family providing for all its wants, and a 
division of labor among a million people, is almost be- 
yond the power of imagination. Most of the advan- 
tages will have been gained before we reach the mill- 
ion limit, and the gain from further additions will be 
barely perceptible. In this, we have assumed an 
educated and cultured population, equal to the best 
and most intelligent in the United States ; let us say 
the best million of the sixty-five. It will be readily 
seen how the presence of this million people would 
give us nearly all the advantages we now enjoy. The 
demand for very many goods does not now extend much 
further. It is the number of wants, combined with 
labor power to satisfy them, that creates the demand 
and makes the division of labor possible ; the char- 
acter, rather than the number of the people. 

In satisfying the wants that grow out of the need 
of Society, then, as well as those which come from 
our need of the other resources, we find that a con- 
siderable population is an advantage, but that there is 
a limit beyond which this advantage ceases. 

We have thus far said nothing about the agreeable- 



POPULATION AND SOCIETY. 109 

aiess or disagreeableness of neighbors as a part of So- 
ciety. After it has increased to a few dozen people, 
the* social advantage of a larger number depends alto- 
gether on their character. When there come to us 
cultured and Christian Englishmen, our society is en- 
riched by so much. When we receive a shipload of 
the lowest Poles, Italians or Chinamen, we have more 
people, but society is so much the worse. We have 
them to govern, or rather (to our shame be it said) to 
lielp govern us. We come in contact with their vices. 
Their filth is a source of sanitary danger. Socially, 
they are so much rubbish, which we could well afford 
to pay something to get rid of. Whatever advantage 
is gained from their labor is more than lost by their 
presence. The gain from their labor accrues to a few 
wealthy manufacturers. The loss is the loss of the 
entire people. It is unfortunate for us to add to our 
population a single person who has not already a desir- 
able standard of living, and labor power enough to 
maintain it. 

Value of Society. — The value of the society of 
one class of people is very different from that of an- 
other class. To have value, Society must first have 
utility. The presence of a highway robber has no 
utility to a traveler. The presence of a friend dur- 
ing the journey might be very useful. The society of 
Chinese has no utility for Americans, even when their 
labor is desired. The society of families of intelli- 
gence, good morals and agreeable disposition is of 
very high utility. In the satisfaction of wants indi- 
rectly, the society of a thousand Hottentots, who con- 



110 POPULATION. 

sumed no goods, would add very little to the oppor- 
tunity of increase in economic production through the 
division of labor. The society of a thousand average 
American families would add materially to the wants 
to be satisfied and to the demand for goods. 

Granting that the society of any particular persons 
or class has utility for us, its value, like the value of 
all resources, depends on its scarcity. The man who 
has all the agreeable acquaintances he can meet, does 
not greatly care for more. The presence of his man 
Friday had great value to Robinson Crusoe. The 
presence of another man would have been desirable, 
but not worth so much to him. 

So in satisfying wants indirectly. A single family 
can divide the necessary labor between its members, to 
great advantage. A thousand families can carry the 
division of labor to an extent which will gain the 
major part of all that is possible to be gained by this 
means. The value of the society of another thousand 
would not be anything like that of the first thousand. 
The value of the society of a tenth million would be 
very little. As in most other instances, value de- 
creases very rapidly as the want becomes partially 
satisfied. A little of anything desired is a hundred 
times the value of the same quantity after the want is 
nearly satisfied. Our object is to satisfy wants. The 
quantity of anything which man desires is limited. 
Value is what a given quantity is worth to him. After 
he has all he wants, an additional quantity is worth 
nothing. Long before one's wants are fully satisfied, 
the value of the article decreases. The value of So- 



POPULATION AND SOCIETY. Ill 

ciety a hundred years ago, in the United States, found 
expression in the desire to get more men of a good 
class from Europe. Now it has no value at all, and 
the instincts of the people have led to a realization of 
the fact. The country now has all the people it needs. 
In all this it must not be forgotten we are consider- 
ing Value in Use, and not Value in Exchange. 

We may sum up the last four chapters as follows : 

1. The Resources of Nature can not be increased; 
but are very abundant, and will satisfy the wants of a 
certain number of people better than when population 
is less dense. When the number exceeds a certain 
limit, in a given state of civilization and progress, 
there is less of the Resources of Nature for each 
one ; this limit is the point of diminishing returns 
to labor bestowed on land. The discovery of new 
Natural Resources opens the way for satisfying the 
wants of a larger population, but discovery is not cre- 
ation, and nothing can be discovered which does not 
exist. 

2. The labor power of nations is seldom in propor- 
tion to their population ; the labor power of any nation 
may be multiplied many times with no increase in 
the population ; and there may be a great increase in 
popidation with very little increase in labor power. 
The labor power of a nation depends on the kind of 
people rather than on their number. With no immi- 
gration, however, there is no reason why increase of 
labor power should not keep pace with population ; 
and, with education and proper training, the power of 



112 POPULATION. 

the people to labor should increase faster than their 
number. 

3. The accumulated Resources Produced by Hu- 
man Industry bear no fixed relation to the number of 
people. 

4. The advantage of Society depends on the char- 
acter, and not on the number of people. 

There is an almost inestimable advantage in a popu- 
lation large enough for the purposes previously de- 
scribed ; but this number is comparatively small, and 
there is only slight gain in further increase. 

It is evident, then, that the wants of each person 
•can be satisfied much more easily and fully by an in- 
crease of population up to a certain limit. When that 
limit is passed, there will at first be a slight gain in 
some ways and a loss in others ; and it is probable 
that the population might be doubled, and, it may be, 
multiplied by ten, without greatly affecting the welfare 
of each individual ; but with continued increase in the 
number of people there is certain to come a time when 
the satisfaction of the wants of each individual will be 
far more difficult than if the population were smaller. 
Not more difficult than it was a half century ago, but 
more difficult than it would be now, were there fewer 
people. This condition of things has been reached in 
England. England suffers from many traditions, the 
presence of privileged classes, and misgovernment. No 
doubt the average welfare of each individual might be 
far greater than it is, but it is impossible that each 
should have as much as if there were fewer people on 
the island. The condition of affairs is disguised by 



POPULATION AND SOCIETY. 113 

Importations from foreign countries, so that the En- 
glish people use not only the land of England, but the 
-wheat fields of the Dakotas and Southern Russia. 
Were the English people shut up in England, the im- 
possibility of each having as much as if there were 
fewer would be plainly seen. Her statesmen realize 
this, and are sending colonies to all the world. She 
is seeking, not for more lands to conquer, but for more 
lands to colonize. 

In this country, the question is not one of emigra- 
tion, but of immigration. Ideas penetrate the masses 
of the people slowly, and when once accepted retain 
their hold long after changed conditions have made 
them dangerous. At the close of the Revolutionary 
War, we were a small people with a great country, 
and little of the land was in actual use. There was 
room for millions more ; and our fathers rightly judged 
that the nation would be better able to defend itself 
against foreign powers if it had more men. There is 
also a pride in numbers. We like to brag of how 
great we are, and how many we are. The fathers were 
right in holding that an addition of a few more mil- 
lions of men like themselves would be of great advan- 
tage. The men who came were of a good class. They 
expected hardships in the New World, and they were 
men of the temper and ability to meet them. The 
idea that immigration is an advantage remained in the 
minds of the people after immigration became one of 
our greatest dangers. The early immigrants were not 
objectionable as society. They were English, Scotch, 
Irish and German — people like ourselves, whose chil- 



114 POPULATION. 

dren and grandchildren are to-day among the best of 
American citizens. 

All this is now changed. This country, if not full, 
is so nearly filled that land and other Natural Re- 
sources should be saved for the children of those now 
here. It is to be remembered that when there is land 
enough and room enough, population increases veiy 
rapidly, without immigration. We should soon be a 
hundred million if no other emigrants came to our 
shores. Were there land enough without crowding, a. 
generation thereafter would see two hundred millions. 
The majority of the people we are now receiving from 
abroad are no longer desirable. We have long since 
passed the point where increase of numbers is of any 
advantage. We have more than enough to use the 
Resources of Nature beyond the limit of diminishing 
returns ; more than enough for society and to afford 
the widest opportunity for the division of labor. 
There is still room for the cultured Englishman and 
German. They add diversity to our society, and their 
continued coming will be a gain. But they are only a 
fraction of one per cent, of the immigrants we get. 
Most of those who come to us are not the best, but the 
worst, of the nation which sends them. The Italians 
are here in large force, and they are the class of Ital- 
ians which Italy is glad to spare. We have narrowly 
escaped being overwhelmed by a flood from China. It: 
illustrates the strength of old terms and sentences from 
which the idea has departed, to see how many good 
men of New England were horrified at the thought 
of restricting Chinese immigration. They appeared 



POPULATION AND SOCIETY. 115 

utterly heartless and brutal in regard to their own 
countrymen. They were not so in reality; it was 
merely the strength of old methods of thought, and 
the habit of saying : " America is to be an asylum for 
all nations." As if the splendid civilization of Amer- 
ica is to be buried under the rubbish cast off from all 
nations in the world ! Many of these men were Chris- 
tians and firm believers in the Scriptures. When the 
Lord saw that the race of men was so wicked that 
nothing could be made out of them, he destroyed them 
with a flood, in order that the world might be filled of 
the descendants of one family, better than the others. 
It is a mistake to suppose that the teaching or the 
spirit of the Bible requires us to open this civilization 
to the influence of the lowest classes of every nation 
in the world. The United States was originally settled 
by men of splendid stock. They brought with them 
the most advanced ideas of their time. The doctrines 
of religious liberty, of moral and religious training, 
of general education, of political liberty restrained by 
firm government, of the development of the individual 
— these and many others have helped to make the 
nation what it is. To permit it to be buried under a 
fiood of Chinese, Italians, Poles, and the lowest people 
of every nation in the world, would seem to be the 
thought of a demon determined to arrest the progress 
of the race. Our duty to send missionaries to teach 
the gospel in heathen lands is clear. Our duty to pro- 
tect our homes and our land against the incoming 
flood of ignorance and vice, is no less clear. 



CHAPTER V. 

THE LAW OF THE INCREASE OF POPULATION. 

Malthus occupies the same relation to the subject of 
Population as Adam Smith to that of Labor. Per- 
haps no man has been more misrepresented, not be- 
cause of any lack of clearness in his writing, but be- 
cause what he wrote is seldom read, except by special 
students of the subject ; and flippant writers have 
found it convenient to use his name for almost any- 
thing they pleased. Malthus was an English clergy- 
man, the father of eleven children, a Christian who 
desired to alleviate human misery, and to do all that 
lay in his power toward the development of the race 
in its highest character. His " Essay on Population," 
published a hundred years ago, was mainly devoted to- 
an historical investigation of the causes which have 
kept population down to its present limit. He was a. 
keen logician, a careful investigator, and the world 
owes him a great debt. John Stuart Mill pressed the 
same views somewhat farther than did Malthus ; yet 
so has the name of Malthus been identified with the 
subject of population, that no one thinks of any other 
name in connection with it. 

One who writes to-day has the advantage, not only 

of Malthus' investigation, but of all criticism that has 

been made upon it, and of the new truth evolved 

through the discussions of a hundred years. I have 

(116) 



THE LAW OF THE INCREASE OF POPULATION. 117 

sought neither to avoid nor to follow the methods of 
statement of Adam Smith on Labor, or of Malthus on 
Population. My only purpose is to present what seems 
the truth on each subject, in as direct and simple a 
manner as I am able. 

Men, like plants and animals, tend to fill any coun- 
try in a period which is very brief compared with 
human history. Clear off the forest, and a crop of 
weeds springs up the first season. They were not 
there before, because there was not room enough for 
them to grow. If the ground is kept clear of other 
growths, the seeds of a single plant will soon cover a 
large area with luxuriant vegetation. Nature is very 
prolific, and there is no limit to the possible increase 
of any species of plant or animal, except the lack of 
room, subsistence, or conditions of life favorable to it. 
Were every other species of vegetation kept down, a 
single bushel of wheat could cover all that portion of 
the earth in which the climate is fitted to its growth, 
in a period of twelve years. A few horses left in 
South America filled all the plains. There are but 
few animals which would not fill the whole earth with 
their kind in a hundred years if there were no other 
animals to interfere with them. Man is no exception 
to the law of rapid increase where there is room for- 
him. To find that room we must take a new country,, 
where there is work for all, with a living, respectable^ 
in the eyes of one's neighbors, for all who are willing 
to work ; and where there is no reason for delay in mar- 
riage. An approach to such a condition of things was 
found in this country a few generations ago. People 



118 ' POPULATION. 

had a poorer living than at present, but there was more 
equality. Young people were expected to marry at an 
early age, and it was generally believed that the mar- 
ried man made as good a living as the single man. The 
conditions for the rapid increase of population were 
far from the most favorable ; but from 1790, the time 
when the first census was taken, the population of the 
entire United States doubled, by natural increase, in 
twenty-three years ; and doubled again in about the 
same period. There was very little immigration. 
The census of 1790 showed a population of less than 
4,000,000 ; fifty years later, in 1840, there were more 
than 17,000,000. Malthus assumed a tendency of 
population to double, in round numbers, as often as 
once every twenty-five years ; but under favorable cir- 
cumstances, with plenty of room, and no doubt of a 
livelihood for each one and his family, it is evident that 
population would increase much more rapidly, prob- 
ably doubling every eighteen or twenty years. The 
precise period is, however, of little hnportance com- 
pared with the fact that the increase is in geometrical 
progression. Geometrical progression is familiar to 
most persons, in the story of the horse-shoe nails ; 
yet we are all astonished at the results, the moment 
we make the calculation. The number of people on 
the earth at present is estimated at 1,500,000,000. If 
the population of the United States were only 60,000,- 
000, and were to double every twenty-five years, in 
twenty-five years there would be 120,000,000 ; in fifty 
years, 240,000,000; in seventy-five years, 480,000,- 
000 ; in one hundred years, 960,000,000 ; in one hun- 



THE LAW OF THE INCREASE OF POPULATION. 119 

dred and twenty-five years, 1,920,000,000, nearly one- 
fourth more than the present population of the globe. 
Either the United States, England or Germany would 
re-people the earth in less than a hundred and fifty 
years, if the inhabitants of every other land were 
swept off by a pestilence. A single million people 
would fill the United States with 64,000,000, its pres- 
ent population, in less than a hundred and fifty years. 
The question of the future is whether the people of 
the United States in the next century shall be de- 
scended from the best element of American citizens, or 
from Chinese, Italians, and other immigrants. India is 
full of people — 240,000,000 ; China's population could 
overrun the entire earth in less than a century if it 
had the opportunity. 

For a hundred years, every possible effort has been 
made to break the force of these statements, which one 
would suppose must be almost self-evident. It is diffi- 
cult to see how any one can doubt their truth the mo- 
ment his attention is called to them, but some strange 
ideas have been advanced. 

The most common objection is that these statements 
can not possibly be true, because, as a matter of fact, 
population has not usually increased at the rate men- 
tioned. But no one said that it had. Such an increase 
for a thousand years would be an impossibility, because 
the earth would not support the people. It is only 
affirmed that it is the tendency of population to in- 
crease at this rate, that it will do so where there is 
room for it — where the people feel reasonably sure of 
a living, and where the increase is not checked by ex- 



120 POPULATION. 

ternal causes, such as war or pestilence. Mr. J. E„ 
Cairnes has illustrated the truth by centrifugal and 
centripetal forces : the tendency of the attraction of 
gravitation is to draw a planet to the sun, while the 
tendency of its momentum is to fly off in a straight 
line ; ,the result of the combined action is to cause the 
planet to move in an ellipse around the attracting 
body. We should make little progress in science if 
we did not understand and measure both these forces ; 
when we say the tendency of the attraction of gravita- 
tion is to draw a planet to the sun, we mean that it 
would draw it there were there no opposing forces. 
The tendency is a real force, which must be taken ac- 
count of, though the actual result can not be ascer- 
tained except by estimating the combined effect of all 
the forces. 

The final check to the increase of population is lack 
of subsistence, not for all, but for the poor. But there 
are other checks which diminish the rate of increase, 
and in most civilized countries prevent its reaching the 
point where any considerable portion of the people 
suffer from lack of food. 

War. — War has always been one means by which 
population has been kept down. As the annuals have 
been hunted by man, so men have been hunted by 
each other. A Scotch laird said he did not care 
how hard-shot his estate might be, by one who leased 
it for hunting, since there were always enough animals 
left to replenish it. But for the natural power of 
men to multiply rapidly, the race of men might have 
become extinct in the barbarous wars of savage tribes.. 



THE LAW OF THE INCREASE OF POPULATION. 121 

Such civilized nations as the Greeks and Romans, and. 
Eastern nations before them, carried death where they 
carried their arms. The number of people may be no 
less to-day than if there had been no wars ; the de- 
struction of war has given room for more rapid in- 
crease in time of peace, and the limit of subsistence 
has not been so quickly reached. There is reason to- 
hope that the slaughter of men by each other will, in 
time, be abandoned, and this check to the increase of 
population will then be removed. 

Cruelty. — Closely allied to war is simple cruelty. 
Human life has often been held very cheap. Slavery, 
oppression, and cruelty of all kinds, have destroyed life 
recklessly all through the world's history. Savage 
tribes have put to death all that came in their way, 
women and children as well as men ; and some of the 
highest civilizations of the ancient world have shown 
more cruelty than the savage. The history of the 
world is red with blood. Unfortunately, it has often 
been the best men whose lives were lost. Could the- 
earth have been peopled by their descendants, instead 
of their slayers, civilization might have made more 
rapid progress. Suppose the Huguenots had not been 
slaughtered, there might have been no more people 
in France to-day, but a considerable portion of the 
French population would now be descended from those 
Huguenots. Suppose the Christian martyrs could have 
peopled the earth instead of their slayers ! 

Pestilence. — Pestilence is sometimes only a part of 
the destruction caused by famine ; but, aside from this, 
the loss of lives from such raging diseases as cholera^ 



122 POPULATION. 

and even smallpox before the principle of vaccination 
was discovered, has contributed greatly to the keeping 
down of population. Such pestilences as the Black 
Death of the fourteenth century have contributed 
their share. All pestilences, not the result of fam- 
ine, are filth diseases ; not so often caused by filthy 
habits in the immediate sufferers, or even in the na- 
tions where they work their greatest destruction, as by 
those of other people and other lands in which they 
originate. The filth of the East has been the cause 
of cholera in Western nations. With the spread of 
medical and sanitary science, a p'estilence will soon be 
a thing of the past. Smallpox is practically under 
control, and the present generation can scarcely under- 
stand the ravages it made a century ago. There is 
very little to fear from cholera in this country, not- 
withstanding the certainty that it will be occasionally 
brought to our shores. The lower nations will in time 
learn more of sanitary science, and pestilences will be- 
come less frequent in the East. These great checks 
to the increase of population are certain to act with 
less power in the future, and may in time be entirely 
removed. 

With the history of the past before us, it seems pe- 
culiarly fortunate that this tendency to rapid increase 
of population exists. It has enabled man to fill the 
earth, to repeople localities almost depopulated by war 
and pestilence, and has provided a powerful force which 
almost immediately closes up any gap in the number 
of people, when there are fewer than the land will com- 
fortably support. 



THE LAW OF THE INCEEASE OF POPULATION. 123 

Overcrowding . — Where the population has not been 
kept down by war and pestilence, the simple crowding 
of people in narrow quarters itself tends to prevent a 
rapid increase in their number, through an increased 
death rate. It is true that the death rate in great 
cities of the present is less than in many parts of the 
country, because of the excellence of modern sanitary 
arrangements ; but this is only true of the city as a 
whole. In the localities which are the more closely 
crowded with the poor, the death rate, especially among 
children, is far greater than in the city at large, or in 
the country. It is not possible to obtain accurate sta- 
tistics of ancient times, but, from what is known of the 
methods of living, there can scarcely be a doubt that 
the mortality caused by the huddling together of people 
in cities has been a powerful check on the increase o£ 
the population. The sanitary arrangements where 
people are few, may be even worse than in crowded 
cities, but the isolation and wide space of country are 
themselves among the best sanitary measures. A fam- 
ily of ten people may occupy a house of two small 
rooms in the country, but this is a very different thing 
from two rooms in a tenement house in a city, with 
other families over and under and around them, and 
no ground to step upon but the crowded street. As 
with war and pestilence, this check is also rapidly dis- 
appearing, or rather, in consequence of sanitary ar- 
rangements, population will bear much greater crowd- 
ing than before. In such cities as Glasgow, the pro- 
vision, even for the poor, is so good that we must ex- 
pect a rapidly diminishing death rate ; and the most 



124 POPULATION. 

crowded portions of the largest cities in the world may- 
be made more healthful than some country villages. 
All this, however, is accomplished at a rapidly increas- 
ing cost as popidation becomes more dense. 

Famine. — When the natural tendency of popula- 
tion to increase is not overcome by other methods, it 
soon presses upon subsistence. We do not mean by 
this that the earth is not able to produce ten times 
more than it does at present ; but that in the state of 
civilization at any given period, population will press 
upon the subsistence which is actually produced by the 
methods of the period. Shortage is first shown in fre- 
quently recurring famines. In good years there is suf- 
ficient, but there is only a small reserve accumulated 
for bad years ; and a series of bad years, or a year 
in which the product is greatly reduced, means a fam- 
ine. It is, of course, the poor who suffer. There will 
always be enough for a large portion of the popula- 
tion, and those who have most wealth will be able to 
secure abundance ; but though a few may have more 
than they need, and may waste in carelessness, there is 
not enough for all, even if it were equally divided. 
This is true of all recent famines — in Russia, India and 
China. A few years ago, in northern China, the peo- 
ple had eaten the green earth bare, and were dying of 
hunger ; the tales of the famine in Russia in 1891-92 
made little impression on our ears, for we accepted the 
fact that the suffering must be great, and cared to hear 
as little about it as we might. In some provinces, the 
people ate everything that could be eaten, and then lay 
down to die. Comparatively few people die of actual 



THE LAW OF THE INCKEASE OF POPULATION. 125 

starvation, even in a famine. Insufficiency of food 
"brings disease. A general state of unhealthfulness 
prevails, and those who die of diseases caused by in- 
sufficient food, and from other effects of the famine, 
are many more than those who actually starve. If no 
other cause acts to prevent the increase of population 
in accordance with its natural tendency, we may be 
sure we shall always find its growth checked here. 

It is easy to say that with better methods of produc- 
tion, better government, and more equal distribution 
of products, the present population of every province 
of Russia could easily be supported ; but it is certain 
that in the present condition of Russian society these 
improvements will not be made, even with the certainty 
of a famine in some province every few years. Popu- 
lation has reached the limit of subsistence in the pres- 
ent state of society in that country. The time will 
come when it will support twice as many in greater 
comfort ; but twice as many people at present would 
mean more deaths from starvation, and greater suffer- 
ing to all. Neither has the pressure of population 
upon subsistence anywhere in the world's history, of 
itself, tended to improved methods of cultivation, or to 
a provision for the support of a larger number. The 
greatest progress has been made in countries like the 
United States, which have not been overpopulated, and 
where the opportunities for each one to improve his 
condition are, therefore, so much the greater. The im- 
provement of the individual leads to practical improve- 
ment in methods of production. Progress in over- 
crowded countries is due to other causes, and is in 



126 POPULATION. 

spite of the pressure of population on subsistence,, 
rather than in consequence of it. 

Deferred Marriages. — The checks which tend to 
prevent the increase of population thus far noticed 
may all be reduced to misery, vice or crime. They are 
such as we are seeking to avoid. The population has 
been kept down by starvation, overcrowding and pes- 
tilence, and by wars, murders and other crimes. There 
is an entirely different class of influences, which in 
civilized countries operate to counteract the tendency 
of population to increase with its natural rapidity. 
The most important of these is the delay of marriage 
through one's inability to support a family in the man- 
ner he desires or considers respectable. In a new 
country, where we suppose population to increase with 
less restraint, people marry at an early age. It is 
evident that early marriages mean larger families. It 
is not simply that each family has a larger number of 
children ; they have them earlier in life, and the 
second and third generations begin sooner. Many a 
man now marries at thirty who would have married at 
twenty-five or earlier had he been able to support a 
wife. All causes which tend to delay marriage act as 
a check on the increase of population. These causes 
increase as population presses harder upon subsistence. 
In a new country such restraints are little felt. It is 
the popular opinion that a man gets along better after 
marriage than before. As the country grows older and 
more densely populated, he sees that he can not pro- 
vide for a family in the way he regards necessary, and 
defers marriage until he has learned a trade, or ac- 



THE LAW OF THE INCREASE OF POPULATION. 127 

cumulated a little money, or finished his studies and 
established himself in his profession, or got a start in 
business, or secured a position which will enable him 
to support a wife and family. All this may take ten 
years. The unfortunate feature of this influence is 
that it acts to prevent the increase of the better classes 
of the people, and leaves the gap to be filled by the 
descendants of the worthless and the ignorant. Those 
who are satisfied to live and bring up a family in 
squalor marry young, so that the great increase in 
population in every country comes from them. It 
would be better for the future if the conditions could 
be reversed ; if it were the intelligent, the enterpris- 
ing, and the best element among the people which 
marries young, and if the greater portion of the next 
generation could be their descendants instead of those 
of the reckless, the shiftless, and the ignorant. If 
there were no pressure of population upon subsistence, 
it would be so. If every man felt able to bring up his 
family in what he regards as a condition of decency, 
early marriages would be the rule. This was the con- 
dition of affairs seventy-five or a hundred years ago* 
The energetic young man believed in his ability to. 
make a living which his neighbors would regard as re- 
spectable, and marriages among the better class of 
people were as early, and families as large, as among- 
the others. 

The opening of new employments to women has; 

had a very decided effect in preventing or delaying; 

marriages among the better classes. Many a woman 

now supports herself who a hundred years ago would 

9 



128 POPULATION. 

have married before she was eighteen, because mar- 
riage was the only avenue open to her. If unmarried, 
she remained at her father's, or with relatives, in a 
position thought inferior to the married state. If she 
were compelled to earn her own living, domestic ser- 
vice was almost the only employment open to her. All 
this has been changed. Women have almost a monop- 
oly of teaching in the common schools. They have 
become telegraph operators, stenographers, typewriters, 
clerks and saleswomen, and are practicing law and 
medicine. A still larger number are at work in fac- 
tories, and nearly every employment which woman 
chooses to enter is now open to her. This must have 
an influence on marriage. Fewer women are likely to 
marry merely for a home. Women who are able to 
support themselves with the respect of society are 
not likely to marry except from choice. The effect is 
Tather to defer marriage for a few years than to pre- 
vent it, although fewer marriages take place than 
would occur under other conditions. 

JPiiblic opinion has much to do with the number of 
marriages. In many instances this has been thrown 
on the side of early marriages, and men were led to 
feel that he who brought up a family rendered a ser- 
vice to his country. Such a public opinion must lead 
to somewhat earlier marriages, on the average, since 
one will take more risks of being able to provide for 
the future. Where public opinion is on the other 
side, and says that one has no right to marry and bur- 
den society with a family which he will not be able to 
support, it must tend to make even the reckless more 



THE LAW OF THE INCREASE OF POPULATION. 129 

prudent. The less intelligent members of the commu- 
nity, those who would never read a book on Political 
Economy, are more likely to be reached by this in- 
fluence than by any other. In fact, public opinion is 
almost the only force which acts to defer marriages 
among the ignorant and the lower classes of society. 
Their death rate, however, owing to unsanitary sur- 
roundings, is abnormally high. 

An attempt has been made in some countries to reg- 
ulate marriages by law, and to refuse permission to 
marry unless some satisfactory evidence of ability to 
support a family is given. The effect of such laws, as 
might have been expected, has always been an increase 
of the number of illegitimate births, and of immo- 
rality. Such laws do, however, act as a check on the 
increase of population. 

Other legal prohibitions and regulations have often 
had a very decided effect on the increase of popula- 
tion. The requirement that one must serve in the 
army until a certain age tends to defer marriage. 

Poor Laws, especially laws where relief is given 
outside of almshouses, have the opposite effect of 
increasing the population. We have seen that the 
fear of want and starvation is almost as powerful a 
check as starvation itself ; but where one knows 
that neither he nor his children will be allowed to 
starve, he trusts to luck and the poor laws. It is 
true there is an independence which prefers star- 
vation to charity ; but this independence is not pos- 
sessed by all, and is very easily weakened. Once let 
a man be driven by distress to accept aid, and his 



130 POPULATION. 

independence is broken ; he soon comes to seek f or 
aid, and to prefer charity to labor. It is in the cities 
and old countries, where population is dense, that we 
find so many sad instances of this kind. 

How much crime has to do as a check to the 
increase of population can not well be determined. 
In China population is almost held stationary by the 
murder of infants, especially females ; and the ex- 
posure and murder of infants was common among 
many nations of ancient times. Crime, including the 
murder of infants, and lesser crimes and vices, has 
undoubtedly been a powerful check to the increase of 
population ; but the extent of its effect can be only 
guessed. 

Enough has certainly been said to explain the- 
meaning of the statement, " tendency of population to 
increase, and to double as often as once in every 
twenty-five years." Enough of the causes which 
check this natural increase — war, pestilence, famine, 
overcrowding, crime, and the delay of marriage — 
have been enumerated to show the power of the in- 
fluences which have tended to prevent the increase of 
population in the past. If these causes had not acted, 
we may be sure that starvation would have effected 
the same result. It would seem that no one could 
argue that, because population has not increased at a 
certain rate since the beginning of history, it has no 
tendency to increase at that rate. Had there been no 
checks to their increase, a single thousand people 
would have become 1,000,000,000,000,000 in a 
thousand years. We know that population will not 



THE LAW OF THE INCREASE OF POPULATION. 131 

increase at the rate of a favorable new country, 
"because, even with all the improvements and discov- 
eries that can be made, there will be no room for it. 

The law of the rapid increase of population is in 
harmony with all other laws of nature. Nature is 
very prolific, and provides abundantly for the increase 
of all living things. If the law of population were 
different, man would be an exception to every other 
living thing upon the earth. With the world's 
history of war and crime and cruelty, if there had 
not been this tendency of population to increase 
with startling rapidity, whenever it had the oppor- 
tunity, the race might have become extinct. 

The fact that population increases in geometrical 
progression has been the occasion for many attacks 
on Malthus. It is not probable that he himself at- 
tached much importance to this particular form of 
statement, and many modern political economists have 
been inclined to state the truth in some other way. 
But the fact that every increase in population becomes 
the basis for further increase makes it geometrical 
progression. This is what distinguishes geometrical 
progression from arithmetical. The rate of increase 
may (mange ; and the tendency to increase has been 
limited in the past by the various checks described ; 
some of the most cruel we may hope will soon cease 
to act. 

The natural rate of increase of population would 

• doubtless be found to be somewhat different among 

different races and peoples ; but there is probably no 

■civilized race which would not double in twenty-five 



132 POPULATION. 

years, or less, were all checks, such as war, cruelty,, 
pestilence, etc., removed ; and were there abundant 
room in the country, with sanitary surroundings, and 
opportunity for every honest laborer to support a 
family in respectability. 

It is not probable, however, that Malthus meant 
to lay any particular stress on any assumed rate of 
increase. He selected twenty-five years for illustration 
because it is a round number, and he believed that 
history had shown that the tendency is to double in 
shorter periods. It would certainly be unfortunate 
for us to lay much stress on any particular rate of in- 
crease. The important fact is the tendency of any 
people to fill rapidly any country where there is room 
for them. There can be no doubt that, if other in- 
habitants were swept away, a thousand people of any 
civilized nation would very soon fill the whole earth. 
This tendency is fortunate, though it often entails 
suffering. But it forces on us the question, What 
people are to be the ancestors of the people of the 
future — the intelligent or the ignorant ? the moral or 
the degraded? 

There has been another attempt to break the force 
of the law of the increase of population, which should 
be treated with more respect. It has been assumed 
that the tendency of population to increase decreases 
with the age of the world, or of any nation or people, 
and with the advance of civilization ; so that it ap- 
proaches the point where the death rate and the birth 
rate will be equal. This assumption — for it is a 
pure assumption— has naturally arisen from the fact 



THE LAW OF THE INCREASE OF POPULATION. 133 

that the rate of Increase in some countries has dimin- 
ished through the action of deferred marriages, and 
other checks, which do not show any weakening of the 
natural tendency of population to increase as rapidly 
as ever, under favorable circumstances. The best 
example of a population nearly stationary is that of 
France. It is stated that in the provinces, where the 
land is divided into small holdings, young people as a 
rule do not marry until there is a place for a new 
family. They wait until a holding is vacated by 
death, or some place filled by people in their station 
in life is opened ; so that the population is practically 
kept stationary through deferred marriages. How 
much crime, especially in the cities of France, has to 
do with keeping the population within its present 
limits, it is impossible to say. As it becomes more 
dense than can be supported with the greatest comfort 
to all, a great variety of checks come into play to 
prevent its increase. The fear of starvation, or of 
want, or insufficiency, or even inability to live in the 
manner which one's acquaintances will regard as re- 
spectable, is often as potent an influence as starvation 
itself. But this does not go to show that the natural 
tendency is weakened in any degree, only that other 
influences have come into play. The French people 
would certainly fill this earth in less than two hundred 
years, were all other nations suddenly destroyed by a 
flood. 

That the tendency of population to increase is not 
weakened is shown by the knowledge we all have of 
society and history. "Who can doubt that if a 



134 POPULATION. 

thousand Englishmen, Germans or Frenchmen were 
placed in an unoccupied country, where more men are 
as desirable as they were in the early days of this re- 
public, where the position of each is not far from 
equal, and there is no doubt of satisfactory provision 
for all, the increase of population would be as rapid 
as in the first fifty years of the United States ? Im- 
agine society in a state of socialism, and the state to 
agree to provide for all, and the children of all, does 
any one doubt that the population would increase as 
fast as in the early days of this republic ? 



CHAPTER VI. 

APPLICATIONS OF THE LAW OF THE INCREASE OF 
POPULATION. 

1. Emigeation. — The most natural remedy for an 
overpopulated country is emigration. It is by this 
means that the whole earth has been peopled. Men 
go West, where land is more abundant, where there is 
more room for new families. England has sent her 
colonies all over the world ; she laid the foundation 
of the United States, and is now filling Australia and 
New Zealand. So long as there is unoccupied land, or 
land occupied by savages, it may be peopled from the 
older nations of the world. The new country is for- 
tunate if the emigration is of the best blood of the old, 
as happened with this country before the Revolution. 
Yet when even the worst class of people are selected, 
they seem to do better than at home. New surround- 
ings, more room, the encouragement to exertion which 
more room brings, appear to build up the strength and 
character of a majority of the emigrants ; and their 
descendants are likely to show a still greater advance. 
We can not expect them to equal those from better 
stock, but they appear to make more progress than in 
the country whence they came. 

Countries suitable for settlement are, however, fill- 
ing rapidly. Europe and Asia have as many people 
as they can support to the best advantage in the pres- 

(135) 



136 POPULATION. 

ent state of the world's progress. England is now en- 
deavoring to settle the country north of the United 
States ; but the cold northern regions can support only 
a sparse population. South America is largely peo- 
pled by men of lower civilization, many of them de- 
scended from Indians. With the methods employed 
by modern European nations and the United States,, 
that country would give room for a vast population. 
The greater portion of South America lies in the tor- 
rid zone, which is not so suitable for settlement. The 
southern portion, especially that occupied by the Ar- 
gentine Republic, appears to offer the best opportunity 
of any country in the world, for the surplus popula- 
tion of other nations, but even this land is limited- 
Australia, by reason of the climate, offers little land 
for settlement except the coast line and the northern 
portions. Only a very few, except the original inhabit- 
ants, can live in the interior. There are three million 
Englishmen on the island — about the population of 
the United States before the Revolutionary War — 
and they will fill it with people in a short time. Of 
Africa, the northern part, except a narrow strip on 
the sea, is a barren desert ; Egypt is full ; the southern 
portion of the continent is in the possession of the 
English and Dutch; the central portion has re- 
cently been opened by explorers, but whether the in- 
tense heat will permit any considerable immigration, is 
still an- open question. Civilization will result in a 
great increase of the native population, but it is doubt- 
ful if Africa offers a place for any extensive emigra- 
tion from Europe. 



APPLICATIONS OF THE LAWS OF POPULATION. 137 

A survey of the world shows very little land avail- 
able for emigration from other countries. Most na- 
tions are rapidly coming to understand that all room 
will soon be filled by their own people, and prefer to 
keep it for their descendants rather than for foreigners. 
Every great country in the Old World is seeking for a 
place to plant colonies. China would be glad to 
take Australia, but the people, backed by English iron- 
clads, absolutely refuse them admission. They under- 
stand that they have no more land than they need for 
their own children. European countries have been 
sending their people to the United States, but it is not 
to be supposed that public opinion here will tolerate 
this much longer. Each nation must soon come to 
take care of its own people ; and emigration as a 
check on the rapid increase of population will soon 
be a thing of the past. 

Eefusal to Permit Immigration. — Understand- 
ing the power of any people to fill its own country in 
a comparatively short space of time, it would seem 
that the instinct of serf-preservation would cause an 
absolute prohibition of immigration long before the 
point of diminishing returns is reached. It is not 
strange that a new country, such as the United States 
a hundred years ago, or Australia at the present time, 
with land unoccupied, should desire the immigration of 
people like themselves from the country from which 
they came. But that they should desire this after 
they have become numerous enough to reap all the 
advantages of a large population, is something to excite 
wonder. It is partly accounted for by the slowness- 



138 POPULATION. 

with which ideas permeate the mass of the people in 
ordinary times, and partly by the fact that a few 
persons can make a great deal of money out of such 
immigration at the expense of the entire nation. It 
is through these men, and their friends and supporters, 
that ideas favorable to the admission of immigrants 
are industriously circulated. 

Who Shall People This Land ?— The most im- 
portant deduction from the law of the last chapter is 
that, since the descendants of a very few thousand 
people are able to fill any country in a comparatively 
short period, the future of the world depends on the 
nations or classes of people from which posterity is to 
come. It is particularly fortunate that England rather 
than China has been the colony-planting nation, press- 
ing into new lands and filling them with the English 
rather than the Chinese race. It was also fortunate 
for this nation that our early immigration came from 
the English, the German and the Irish races, rather 
than from Asia. The present immigration is one of 
the most unfortunate that could exist. With a few 
desirable immigrants, we are receiving the scum of 
Europe — criminals, paupers, and diseased persons, 
which the older nations are willing to pay something 
to get rid of. There is a large emigration from 
Italy, Austria and Russia. The persecution of the 
Russian Jews has driven numbers of them to our 
shores — a very undesirable class — not so much because 
they are Jews, as because of their ignorance and 
habits of life. It is not even the addition of this 
half million people annually to our population that 



APPLICATIONS OP THE LAWS OF POPULATION. 139 

is our greatest danger ; it is the fact that it will 
be their children, rather than the children of those 
who have made the United States what it is, that will 
people this land in the future. 

That there may be no doubt about this, let us see 
what " room for population to increase " implies. In 
the struggle for existence it is not the best plants, the 
most desirable, that succeed ; it is usually the weeds 
that overrun the ground. The more desirable plants 
need external help. They do not survive on the laissez 
faire, or let alone, principle. The farmer has a con- 
tinual fight, all the long summer, to raise his crop. 
Weeds crowd out the corn. The farmer uproots them, 
fights them, keeps them out of his field, to give hi& 
corn a chance, to take possession of the ground. The 
question is whether the weeds or the corn shall have 
the land. Free competition always gives it to the 
weeds. Every farmer knows this, and keeps the weeds 
out. When Darwin said " the survival of the fittest " 
he had no reference to the morally fittest, but to plants 
and animals which could best live in the conditions 
about them. The pest of the Canada thistle survives, 
because it is better fitted to the conditions than is- 
useful grain. Let the field alone, and it will soon 
be covered with Canada thistles, with no grain to be 
seen ; and the seeds of the weeds will be borne by 
the wind to stock other fields, and crowd out other 
grain. Vermin multiply, because fitted to the con- 
ditions around them. Some plants can stand the cold ; 
others, perhaps more desirable, are killed by it. The 
Chinaman can live on less than an American, and. 



140 POPULATION. 

therefore fits the conditions of a crowded population. 
When the American comes in competition with him, 
he must either starve or live as' these Chinese live ; 
assuming that there are Chinese enough to make the 
competition real. Many of us have unconsciously 
transferred Darwin's phrase, " survival of the fittest," 
to the morally fittest, using it in a sense in which it is 
utterly false, and which he never intended. 

The number of people which a land will sustain 
depends on how they live, as well as on how much 
they are able to produce. Take the American 
mechanic, farmer or merchant ; he desires to live de- 
cently and with what he regards as necessary comforts. 
He thinks it would have been better not to have been 
born than to live on a lower scale. He wants a house 
for his family, or, if in a city, room enough for 
privacy. He wants sanitary surroundings, conditions 
for a fair degree of cleanliness, comfortable clothing, 
schools for his children, and some intellectual enter- 
tainment. Let one see what the New England factory 
girls demanded, and how they used the little money 
received as wages! Compare such lives with the 
Chinese quarter of California, with Italian dagoes, and 
with the quarters occupied chiefly by the poorer immi- 
grants in New York and Chicago. It costs something 
to live on the American plan. The poorest of our 
people live in a way that is princely compared to many 
of the poor of the Old World. Now, when it comes 
to a struggle for existence, those who can live the 
cheapest, and at the same time do the work, crowd out 
those who must live on a better plan, if they live at 



APPLICATIONS OF THE LAWS OF POPULATION. 141 

rail. Especially is this true of a country as well settled 
as the United States has come to be, where the 
Resources of Nature, and especially the land of the 
country, are in the hands of private owners ; and where 
the great mass of the people are more and more com- 
pelled to work for wages. It is not a question of how 
much can be produced ; it is rather a question of 
what one can get the work done for. The Chinaman, 
living as he does, regards the wages of an ordinary 
American workman as princely, and can afford to 
accept pay on which a self-respecting American family 
would actually starve. We would think that it would 
be better for him and his children to starve than to 
adopt the Chinese method of life. Let Chinese im- 
migration, be free, and enough of the three hundred 
and fifty millions come over to take the place of the 
American workman, and what is he to do ? It is easy 
to see what the best of them will do. They will not 
marry, for one thing. Even now such a man defers 
marriage until he sees a prospect of being able to sup- 
port a family. As a single man he may compete with 
Chinamen, but the children of Americans (except of 
the wealthy class) will become fewer each year. The 
Chinese have hardly begun to bring their families here 
as yet, but if they had a real footing they could sup- 
port a family with the wages that would scarce keep 
an unmarried American in decency. The numerous 
descendants of the Chinaman would promptly fill the 
gap caused by the lack of children of Americans. 
With free immigration from China, it would be but a 
few generations before we should see the great mass 



142 POPULATION. 

of the people of this land descendants of Chinese or 
other immigrants. Good men lament the small increase 
of the old American population, and think there is 
something wrong in the fact that men of American 
descent do not marry earlier, and that there are so 
few children of the old American stock ; but their 
lamentations will not alter the fact. There is some- 
thing wrong, and it is that there is no room for the 
increase of Americans ; that ignorant and foolish peo- 
ple have invited the degraded of every nation under 
the sun to come and fill up the land, instead of pre- 
serving it for the descendants of those who founded 
and made this nation. 

What has been said of the Chinese is true of nearly 
all of our present immigration, which, it is to be re- 
membered, is of an entirely different character from 
what it was twenty years ago. In some respects Rus- 
sian, Italian, and immigration from some other parts 
of Europe, is even worse than that of the Chinese. 
They are near akin to us in race, and if not too nu- 
merous are more likely to assimilate with us ; but the 
danger of the crowding out of the old American pop- 
ulation is still greater than from an equal number of 
Chinese. The European immigrants bring their fami- 
lies with them ; their children are numerous, and al- 
though they expect better wages than the Chinese, 
their competition tends to degrade the American la- 
borer. He can not live as they do. He ought not to 
live in that way. The only chance he has in compe- 
tition with them is in the fact they have so much larger 
families to support than he ; and this means that they 



APPLICATIONS OP THE LAWS OP POPULATION. 143 

are crowding his descendants out, and that their large 
families are to take the land. There is no room for 
the American population to increase ; there is room for 
that of the European immigrant. This tendency is 
somewhat affected by the higher death rate of the for- 
eigner, but nevertheless the rate of his increase is even 
now far greater than that of the American people. 
The very rich are exempted from these conditions, be- 
cause the question of providing for a family need not 
trouble them. It is the great bulk of the sturdy 
American people, the best material to make a nation 
out of that the world has ever seen, who are slowly be- 
ing replaced by the lowest people of Europe and their 
descendants. The foreigner can live in harder condi- 
tions, on poorer food, and in more filthy surroundings. 
There is no doubt that the people of any nation will 
rapidly increase where there is room for them, but room 
is a relative term. There is room only for a certain 
number of hills of corn to an acre, if the crop is 
brought to its greatest perfection. The farmer will per- 
haps plant the hills not less than four feet apart, each 
way. This may seem to be a waste of land, but it is 
all the corn there is really room for. There is plenty 
of room for weeds, however, between the rows ; they 
will grow close together. Let them alone, and they 
will kill the corn. Families, like corn, need a little 
space between. The highest state of civilization and of 
manhood requires nourishing food, comfortable cloth- 
ing, and many things which can be had only where 
population is not too dense. But when there are all 
the people who can subsist in the manner in which it is 
10 



144 POPULATION. 

desirable that the race should live, there is plenty of 
room for Chinese, the Italian and the Russian. He 
can live between the rows of corn, and pack his chil- 
dren into a Chinese quarter, or an Italian tenement 
house. Let him alone, and his descendants will crowd 
out the American. There is room for a hundred of 
him where there is room for one American family. 

The most important application of the law of the 
increase of population, then, is that, so far as we are 
able to control the matter, room should be given the 
best nations to expand, that the earth may be peopled 
by the best rather than the poorest. The people of 
Australia and New Zealand understand this better than 
we. While there is at present room for more people 
there, they propose to save the land for their own de- 
scendants. The same course should be at once adopted 
by the United States. Independent of the character 
of the immigrants, the people of this nation have an 
interest in preserving the United States for their chil- 
dren, and children's children. There is no people in the 
world from whom a race of high social order is so like- 
ly to come as from us. To abandon this land to the 
people whom Europe is anxious to get rid of, is a crime 
against the human race. 

But what about the increase of population within a 
nation itself? In China, India and Russia, population 
is kept within its present limits partly by starvation ; 
not by starvation each year in every part of the coun- 
try, but by frequently recurring famines in extensive 
districts. In India, population was formerly kept with- 
in its old limits largely by wars and the cruelty of the 



APPLICATIONS OF THE LAWS OP POPULATION. 145 

Tipper classes. With the settled government of the 
English this cause has been removed, and population 
presses harder on subsistence, notwithstanding the 
great increase in the productiveness of the country un- 
der English rule. People seldom die of actual hunger. 
Insufficient food leads to disease and death from other 
causes. 

In the United States there has been a very decided 
check to the increase of the better classes through a 
deferring of marriage, because of the unwillingness of 
men to marry until they can support a family, and be- 
cause of the opening of employments to women. If this 
check could reach the criminal, the drunken, and the 
ignorant classes, it would be to the advantage of the 
future. If we could select out the worthless and semi- 
worthless, and induce them to defer marriage, society 
would be the gainer. Unfortunately, this check acts 
on precisely the people whose posterity should fill the 
land. It is the intelligent, the prudent, the men and 
women who wish to live in decency, whose children are 
-the hope of the country, that are now deferring mar- 
riage. Every Bible reader knows how much honor was 
put on marriage, and a family, among the Israelites. 
The Lord had chosen a race and nation for a peculiar 
purpose, and that they might become numerous, pecii- 
liar honor was given to a numerous family. The fact 
that it is the tendency of population to increase so rap- 
idly, that the descendants of those who are a curse to 
society tend to increase in geometrical progression, 
makes it all the more necessary that the moral and the 
intelligent should hold the world against them. There 



146 POPULATION. 

may be too many people in some parts of the world, but 
they are not of the right sort. If the Bible account 
of the flood means anything, it means that the Lord 
destroyed a race because unworthy to people the world 
of the future. The future of this nation depends on the 
number of the descendants of the intelligent and moral 
classes. 

It is not easy to do anything to secure the possession 
of the future by the descendants of the better classes. 
Any suggestion of the deferring of marriage reaches 
precisely the class who ought to marry as young as 
possible, and from whose children the world has the 
most to hope. No one who ought to defer marriage 
reads a book on Political Economy. It has been 
found, in England, that the indiscriminate giving of 
outdoor relief to paupers has had the effect of sup- 
porting large families, whose children continued to be 
a burden on the state after they were grown up. 
Paupers of the permanent class, that is, those who 
require more than temporary relief, should be provided 
for in public institutions, where, of course, marriage 
should not be permitted. 

Outside of actual paupers there seems to be very 
little that can be done toward controlling the increase 
of population within a nation itself, unless it be to en- 
courage early marriages and consequent larger families 
among the well-to-do and the intelligent and educated 
classes, that from them may come a larger portion of 
the people of the future. Any attempt to suppress 
the increase of population is sure to act, if it acts at 
all, on the more intelligent and prudent people, whose' 



APPLICATIONS OF THE LAWS OF POPULATION. 147 

descendants the world greatly needs. The attempt to 
prevent the marriage of those unable to support, or 
unfitted to care for, a family, has been tried to some 
extent in various countries ; but, as might have been 
expected, results in illegitimate births, and lowering 
the morals of the people, though it undoubtedly has 
had some effect in diminishing the rate of increase of 
this class of the population. 

By the education of the children of the masses in 
the common schools, we make them more fit to be the 
fathers and mothers of families. The natural check 
of deferring marriage will also reach them sooner ; so 
that instead of marriage being deferred by the best 
class of citizens, it will be more likely to be put off a 
year or two longer by all. It is only a question of 
what families shall fill the land. Shall it be the most 
intelligent, those from a long line of good, honest, hard- 
working, intelligent ancestry, the educated, the well-to- 
do ; or the ignorant, the vicious, and those with weak 
characters, or unable to support themselves ? 



BOOK III. 

OWNERSHIP AND CONTROL OF 
THE RESOURCES. 



book in. 

OWNERSHIP AND CONTROL OF THE RESOURCES FOR 
THE SATISFACTION OF WANTS. 

Chapter I. Private Property or Socialism, . . 151 

Chapter II. The Ownership and Control of La- 
bor, .... 160 

Chapter III. The Ownership and Control of the 

Resources of Nature, 165 

-Chapter IV. The Ownership and Control of the 
Resources Produced by Human In- 
dustry, 181 

Chapter V. Control of Society, 189 

Individualism and Socialism. 



BOOK III. 

OWNERSHIP AND CONTROL 

OF THE RESOURCES FOR THE SATISFAC- 
TION OF WANTS. 

CHAPTEE I. 

PRIVATE PROPERTY OR SOCIALISM? 

Who shall control the vast resources for the satis- 
faction of human wants? The first question that 
meets us to-day is, Private Property or Socialism ? It 
would not be easy to give a definition of Socialism 
which would be accepted by all Socialists ; but in all 
of its forms Socialism is antagonistic to private prop- 
erty. The popular form at present is State Socialism, 
which has been denned as " The ownership by the State 
of all instruments of production and distribution." 
The instruments of production and distribution em- 
brace the greater part of what is now private property, 
and under State Socialism at least these must be 
owned in common. Putting the control of them in 
the State is a method of communism. Instead of pro- 
viding for some new way of managing the goods held 
in common, State Socialists would use our present 
election machinery, and call the managers by the 

( 151 ) 



152 OWNERSHIP AND CONTROL OF RESOURCES. 

familiar names of our present government officers.. 
State Socialism is the holding of all the instruments 
of production and distribution, usually including 
dwellings, in common. State Socialists do not demand 
a division of goods, but that the State shall take 
possession of all the farms, and the factories, and 
everything by which civilized man gains a livelihood, 
and work them on the common account. The State is- 
to conduct all branches of business. This leaves no 
room for private enterprise, or for the private owner- 
ship of anything, except personal articles of the nature- 
of clothing, books, household furniture, etc. Every- 
man must be employed by the State, and work for 
it or starve. 

Perhaps the most popular presentation of Socialism 
in this country is Bellamy's " Looking Backward." In 
it he assumes that the division of the product of the- 
nation's labor is to be equal ; that it is to be " share 
and share alike." Each person is to receive precisely 
the same, without regard to merit or labor performed. 
This is the practical abolition of private property. It 
is not the division of property among a people, but its 
absorption by the government, so that no man owns 
anything and the State owns everything, with absolute- 
equality for all. No Socialist objects to a practical 
ownership of some articles for personal use, such as- 
clothing and household furniture ; though some would, 
in theory, regard these as belonging to the State, and. 
assigned to the use of individuals, as a railroad company- 
may assign a locomotive to an engineer in its employ.. 
This is a matter of no consequence, however, for, under 



PRIVATE PROPERTY OR SOCIALISM? 153 

Socialism, even the fullest right of private property 
in such articles can have a very limited application. 
All the means of production, including stores and 
warehouses, Socialism insists must be in the hands of 
the State. All business of every kind, all production 
of goods, is to be conducted by the State. 

There are many Socialists, the followers of Rodber- 
tus for instance, who do not advocate equal incomes for 
all. They would have every man paid in labor tickets, 
using common labor as a basis, and estimate other 
forms as being worth so many times as much as com- 
mon labor, hour for hour. Such a system would prob- 
ably present even greater difficulties than the other; 
but in either would practically destroy private property, 
except in the few articles mentioned. The varieties of 
Socialism are numerous, but all are practically an- 
tagonistic to private property ; so that we may set the 
principle of private property on the one hand, and the 
various forms of Socialism on the other. 

Few Socialists at the present day hope to gain their 
end by violence, or by any sudden confiscation of goods. 
Many talk of full compensation for property as fast as- 
absorbed by the State ; but they then proceed to show 
how useless such compensation will be, except for the 
personal gratification of the former owner during his- 
lifetime. As the State absorbs all property, the owner 
can not invest it, and can only receive an annuity in 
the shape of a larger share of goods which he may con- 
sume during his lifetime. 

The Natural Eight of Property. — Is there any 
natural or moral right of property, or is it a mere ques- 



154 OWNERSHIP AND CONTROL OF RESOURCES. 

tion of expediency? For there are those who deny 
the right of property, who nevertheless hold to its ex- 
pediency. Not all men who deny a natural right of 
property are Socialists. Some hold that it is better 
for the majority of the people that property should 
he recognized. Most of us believe, however, that in 
questions like this it is best to see if there is any nat- 
ural right or moral principle, which is firmer ground 
than our opinions of expediency, because the results 
of social experiments are very uncertain. 

The right of individual property is found in the 
innate conviction that a man is entitled to the result of 
his own labor. However closely we are related, and 
mutually dependent, each person is nevertheless a unit 
by himself. He is conscious of the freedom of his will 
to do as he pleases. He has a sense of responsibility 
to others and to higher powers. There is an innate 
conviction that he owns what he has made — that the 
bow he has shaped from the sapling is his. He may 
exchange it for flint arrowheads, with one who has 
learned to chip them into shape. He may exchange 
his labor with an employer, for money or for goods, 
but he feels and knows that his labor is his own. The 
house that he has built with his own hands is his, pro- 
vided what he has gained from others has been with 
their consent. This ownership of himself is not in- 
consistent with his duty to others ; with his duty to 
aid his tribe or his nation in mutual defense ; with the 
duty of a parent to take care of the child until it is 
able to take care of itself ; with the control of minor 
children, or with other duties instinctively recognized 



PRIVATE PROPERTY OR SOCIALISM? 155 

in Society. These duties may be a very considerable 
tax upon him, and require a large portion of his labor 
or its results ; but they do not change the fact that he 
owns himself, and owns the article he makes without 
the aid of others. 

When two or more people unite in production, the 
product belongs to them as a body ; and the question of 
its division must be settled by agreement made before- 
hand, and will be governed by natural laws to be con- 
sidered hereafter. Where a thousand men unite in a 
factory, the distribution of the product of their com- 
bined labor is a complicated affair. Where one man 
agrees to accept a specified sum from an employer, in 
exchange for his labor, the result belongs to the em- 
ployer ; but all this recognizes, and is based upon, the 
fact that man is naturally a freeman ; that he owns 
himself ; that he is entitled to the results of his own 
labor, and has the right to dispose of its product, or to 
dispose of the labor itself, as he pleases. He must not 
be held to unreasonable contracts which he has made 
without understanding them. He can not sell his 
labor for a length of thne that involves slavery. Ev- 
ery bargain must be based on the fact of self-owner- 
ship. 

This fact — that, of right, a man owns himself and is 
entitled to the results of his labor — is the natural 
Declaration of Independence of humanity, — independ- 
ence of slavery, and independence of Socialism. He will 
call no man owner, and he will not sink his independ- 
ence and himself into a slave of the majority, which he 
may find a tyranny worse than that of an individual. 



156 OWNERSHIP AND CONTROL OF RESOURCES. 

The right of private property goes down to the 
foundation of things. It is like the axioms in geome- 
try, or the fundamental principles of morals. Regard- 
less of all questions of expediency, it is the natural be- 
lief of man that there is a "mine" and a "thine " — 
that there is such a thing as a moral right to property. 

It would be easy to show the expediency of permit- 
ting property to be held. With men as they are, So- 
cialism would be most disastrous to the welfare of the 
honest and industrious, and would arrest the progress 
of others. Socialism is not a means of reforming the 
wicked or elevating the indolent. Not only would it 
be terribly unjust and cruel to put the intelligent, 
hardworking business man on a level with the laziest 
and most degraded negro of the South, but it would be 
a great economic loss. The negro would not be bene- 
fited, while the man of higher civilization and charac- 
ter would be injured. Generations of civilization are 
required to make a man, and the differences between 
men are great gulfs which can not be bridged by So- 
cialism. If Socialism could succeed anywhere, it would 
be in an organization of the most intelligent and 
honest. But such experiments as have been made 
give no more encouragement than we should naturally 
expect. The question of expediency, however, while 
not a difficult one to work out, would require more 
pages for its elucidation than can at present be spared. 
It would be necessary to compare thousands of details 
of the two opposed plans for the organization of so- 
ciety. John Stuart Mill held that the decision rested 
upon the control which each method might exert over 



PRIVATE PROPERTY OR SOCIALISM? 157 

the increase of population. The danger which he 
feared was that there would be more people than could 
he provided for under any system, and he held that 
Socialism would exercise less restraint on the increase 
•of the lower orders of people than Individualism. 

Any advantage which Socialism might have in any 
one respect would he more than overbalanced by the 
destruction of individual independence, by the denial 
■of the right of one to the result of his own labor, and 
of his right to act for himself in business undertak- 
ings. Socialism strikes at the highest principles of 
".manhood, and would tend to give us a lower grade of 
men. It would be as intolerable to men of a certain 
stamp of character as would slavery. It is probably 
true that some negroes had better food, medical at- 
tendance and care when slaves than after they be- 
came freemen. It was better for them to work on a 
well-regulated plantation than loaf in idleness. Never- 
theless, freedom is better than slavery — better even for 
the negro. And Socialism is the slavery of the indi- 
vidual, with the majority for his master. It would be 
a system so intolerable that the relative economic ad- 
vantages of the two systems are hardly worth consid- 
ering. Whatever economic advantages Socialism 
claims must be secured without the abolition of indi- 
vidualism, individual rights, and the rights of private 
property. 

What Besources May Become Private Prop- 
erty. — The right of private property does not mean 
that everything may become property. Neither does 
it determine what goods belong to particular indi- 



158 OWNERSHIP AND CONTROL OP RESOURCES. 

vicluals. We first determine that there is such a 
thing as property. The means by which it is acquired, 
the terms on which it is held, and the discussion of 
what resources are the subjects of property, are subor- 
dinate, though most important questions. The right 
of property does not include the right to steal prop- 
erty, — by which we mean the taking possession of 
what belongs to another individual. It does not im- 
ply the right of one man to appropriate what belongs 
to all men in general, any more than the right to take 
from one in particular. It is always in order to in- 
quire how one got his money. The fundamental fact 
is that there is such a thing as a natural right of prop- 
erty in distinction from Socialism. This natural 
right rests solely on one's ownership of himself and 
the thing which he makes. Each man owns himself 
and his labor. Thus the only natural right of prop- 
erty is that of each one to what he has produced, or 
has obtained by honest exchange. Enormous wealth 
may result from the proceeds of one's own labor.. 
Joseph Jefferson has obtained the power (by a life- 
time of painstaking labor) to act in a theater in such 
a way that thousands desire to see him. They are 
willing to pay a dollar or two, each, for the entertain- 
ment he can furnish in a single evening. Jefferson has 
thus received a great fortune in exchange for his own 
labor. No right of property can be higher. The ability 
of a railway superintendent may save his company a 
hundred thousand dollars a year, by better management 
than that of any other man whom they could employ. 
This great power of labor belongs to himself, and what- 



PRIVATE PROPERTY OR SOCIALISM? 159 

ever he can obtain for it in an honest bargain is his. A 
well-informed merchant may do a great service to both 
buyer and seller by bringing goods from distant points, 
paying more for them than the producer would other- 
wise receive, and selling them cheaper than the pur- 
chaser could otherwise buy. The profits of the trans- 
action are the sole result of his labor, and as he has a 
moral right to his labor, so he has a moral right to the 
profits. We have seen in a former chapter that the 
power of labor varies, and there is no doubt that the 
services of some men to society are worth a thousand 
times as much as those of others. 

The moral right of property does not extend beyond 
the results of one's own labor. If property is con- 
ceded by society for any other reason, it is because of 
expediency, and by mutual consent. Right is right, 
and one is entitled to the right, even though in the 
smallest minority. On the ground of expediency, he 
may claim only what the general consent of his nation 
allows. 



11 



CHAPTER II. 

THE OWNERSHIP AND CONTROL OF LABOR. 

In considering the ownership and control of the four 
great classes of Resources, we shall not follow our usual 
order, but begin with Labor. Since this is the founda- 
tion of all right of property, it naturally comes first in 
this connection. 

It is a self-evident truth that, with a few exceptions 
which only illustrate the principle, the power of labor 
belongs to the man in whom it is embodied. The 
ownership of himself carries with it the ownership of 
all his powers. He must be free to exert those powers 
as he pleases, so long as he does not interfere with the 
rights of others, or compel them to provide for his 
wants. Not only moral right, but also the principle of 
-expediency, demands freedom and recognition of the 
fact that one's labor power is his own. 

1. It is demanded by the desire for liberty. The 
whole object of our science is the satisfaction of wants. 
One of the desires common to all men, though stronger 
in some than in others, is liberty, and the control of 
one's own labor. Whatever other wants may be satis- 
fied with the subversion of this principle, this one re- 
mains unsatisfied. The most perfect organization of 
communism would fail to satisfy this most important 
want. It may be said that with private property men 
are obliged to put themselves under the control of 

(160) 



OWNERSHIP AND CONTROL OF LABOR. 161 

others ; but one may change employers, or turn to 
other forms of labor. If land is free, as in new 
countries, he can withdraw entirely from the wages 
system. Thousands of the best men of the Eastern 
States have gone West and taken up farms for them- 
selves. Under Socialism, there is no escape. 

2. The best power of labor is not called out except 
by freedom. If one consents to work under com- 
pulsion, or the lash of the slave-driver, it is only the 
lower powers that are engaged. It is instructive to 
compare the Southern States, as they existed before 
the war, with the Northern. Under slavery there was 
little invention, little use of labor-saving machinery, 
and everything was done in the hardest way. Where 
one is assured of the results of his own labor, or even 
a, considerable part of it, labor power is increased 
many fold. The power of invention and labor-saving 
is called into exercise. Intelligence takes the place of 
muscle, and the wants that can be satisfied are vastly 
greater. 

Apparent Exceptions. — The apparent exceptions 
to the right of each person to the control of himself 
and his labor are : 

1. Children. — This is simply because they are not 
yet men, but men in the process of growth. The in- 
fant is utterly helpless, and incapable of properly 
directing his efforts. The period of childhood is tem- 
porary, and every child, if he lives, will come to the age 
when he ought to be free. It is impossible for parents 
or others to give him the proper care and education, 



162 OWNERSHIP AND CONTROL OF RESOURCES. 

except with considerable power of control. The child. 
is a debtor to his parents and others for this support 
during earlier years ; and this also forms one of the 
grounds of his obligations to Society, whose protection 
is sometimes more important than that of the parent. 
At just what age he should come into the full control, 
of his own labor can be determined only in each case. 
The control of the child before he is able to take care 
of himself forms no real exception to the rule that a 
man should control his own labor. 

2. Idiots and Insane. — The control of these is jus- 
tified by the fact that they are not in their right mind, 
not men in the enjoyment of the ordinary powers of 
manhood. Such control is sometimes necessary for the 
protection of the equal rights of others with equal 
rights with themselves. 

3. Paupers. — If one is unable to provide for his 
own wants, and throws the burden on Society, it is en- 
titled to the control of his labor as compensation there- 
for. Even if it made a profit, it would be entitled to 
the profit in return for its supervision ; but in most 
cases Society hopes at the best only that the labor of 
such persons will pay the expense of their care. It 
seldom does as much as this. 

4. Criminals. — Society must protect itself from 
these, and the most humane form of protection is their 
imprisonment at hard labor, which is also better for 
them than idleness. The labor seldom pays the ex- 
penses of maintenance. If it did, the excess would be 
a just fine as punishment for crime. A criminal, of 
course, forfeits some, not all, of the rights of a free- 
man. 



OWNERSHIP AND CONTROL OF LABOR. 163 

5. Rights of Others. — One's freedom is also lim- 
ited by the freedom of others. He has no more right 
to infringe on their privileges than they on his. Liv- 
ing in society requires limitations which must be the 
«ame for all, that all may have equal rights. One's 
•control of his own labor is thus limited. He may 
justly be forbidden to engage in a business which is 
offensive to his neighbors, but there must be the same 
rule for all. If one man is forbidden to erect an of- 
fensive factory within a certain district, no one else 
must be allowed to create the same nuisance. That is, 
Society may prescribe the terms on which manufactur- 
ing must be carried on, and require all to conform to 
them. Every man is thus on an equality. There is a 
limitation of one's control of his labor, but it is a lim- 
itation imposed on all. 

6. Taxes. — Society is justly entitled to a part of 
the proceeds of one's labor in return for the protection 
it gives and the benefits it bestows. These benefits 
make all the difference between civilization and bar- 
barism, so that no man is ever asked in highly civilized 
countries to pay the full value for what he receives. 
The proper view is that government is carried on as 
a co-operative organization, or a great partnership. 
Those who manage its details are bound to conduct the 
business of the government as cheaply as possible, and 
the cost must be paid by the members under some one 
of many systems of taxation. To take any more than 
is necessary, is robbery of the people. One can not 
withdraw from Society, because there may be no place 
to go ; but he may not make the excuse that he does 



164 OWNERSHIP AND CONTROL OF RESOURCES. 

not desire any government, to avoid paying his share 
of its cost. It would be impossible to take its benefits 
away from him, unless he were declared an outlaw, and 
public proclamation were to be made that no one would 
be punished for seizing his property, or for personal 
assault on himself and family. The supposed case 
shows what Society does for one under a high civiliza- 
tion. At the same time, the measure of the benefit 
received is not the measure of the payment to be made, 
because he is a part of Society, and no one has a better 
right than himself to the advantages of the Society of 
which he forms a part. The measure of his obligation 
is only the cost of the most economical maintenance of 
the government. 

These are only seeming exceptions to the truth that 
one owns his own labor as a matter of right, or ther 
are rather the limitations which properly define and 
strengthen it. 



CHAPTER III. 

THE OWNERSHIP AND CONTROL OF THE RESOURCES 
OF NATURE. 

Since no man has created these, there can be no nat- 
ural right of property in them. Any qualified right 
must be granted by Society solely on the ground of 
expediency. There is no clear thinker who takes any 
other view. Many argue that private ownership is the 
best system for all concerned ; but no one can find any 
natural right of property in the Resources of Nature, 
which no man has made. Two self-evident statements 
are necessary to clear the ground : 

1. We must put aside any personal interest. One 
who is thinking how any possible conclusion may affect 
himself is in no condition to reach the truth. Scien- 
tific investigation is intellectual and cold. It seeks the 
truth, though the truth should be distasteful. One 
difficulty with all studies in Economics is that the re- 
sults touch the personal interests and prejudice of every 
man. If conclusions run contrary to a dogma of one's 
political party, he will have none of them. If there 
is danger that in practice they would lead to personal 
loss, he indignantly affirms that they can not possibly 
be true. Hence we can hope for correct results only 
from one who has the scientific spirit, which puts truth 
above everything else, and searches for facts regardless 
of consequences. 

(165) 



166 OWNERSHIP AND CONTROL OF RESOURCES. 

2. Our investigation will not lead us to any form 
of confiscation. All present rights must be respected. 
We may properly take from one the goods he has ac- 
quired by fraud, and restore them to their rightful 
owner ; but where Society has guaranteed property in 
any form, it must not confiscate what it has recognized. 
If any loss is to be borne, it must be by Society as a 
whole, and shared among all, on some such principle 
as governs the raising of taxes. 

3. We must separate the Resources of Nature from 
those produced by human industry ; land from the im- 
provements. With the atmosphere as a resource of 
nature, complicated questions seldom arise. Very 
seldom is human labor combined with it. The same is 
true in a less degree of water. But land is seldom 
used without improvements. The fences, the drains, 
the buildings of a farm, are all products of human in- 
dustry. The commercial value of a farm must always 
be separated into two parts : First, what the land 
would be worth if a natural prairie with neither fence 
nor drain nor timber on it ; second, what the improve- 
ments are worth, and the commercial value of the im- 
provements may be greater than that of the land. 
The separation is more easily made in a city. We un- 
derstand that a building-lot is worth so much, and the 
building so much. Frequently the two have different 
owners. The proprietor of the building pays ground 
rent to the owner of the land. Many buildings are 
erected in cities on leased ground, and the ground rent 
is sometimes a variable sum. As no one knows what 
land will be worth in the future, it is agreed that the 



OWNERSHIP OF THE NATURAL RESOURCES. 167 

Ibuilder shall pay a fixed ground rent for a period of 
iive or ten years, and that there shall be a revaluation 
of the land by arbitrators every five or ten years there- 
after. The owner of the building thus agrees to pay 
whatever the annual use of the land may be worth. 
Unless this distinction between land and improvements 
is clearly seen, and firmly fixed in the mind, all further 
discussion will be useless. Land is a resource of 
nature ; improvements are the products of human 
labor. The distinction is as fundamental and as im- 
portant as any that can be made in the science of Eco- 
nomics. It is the distinction between the gift of 
nature and the work of man. 

It is precisely because the Resources of Nature are 
the gifts of nature, or the gifts of Grod, that there can 
oe no natural right of individual property in them. 
For one man's right to nature's resources can be no 
higher than that of another. They are given by the 
Creator to all men. The discussion of the control of 
Natural Resources centers in land, although the same 
principles are applicable throughout the list. Social- 
ism would settle the difficulty by working land by the 
State on the common account. Individualism sees the 
necessity of some means whereby possession can be 
given to individuals, who will improve and work land 
on their own account. It also recognizes the natural 
desire of most men for a home of their own — a piece 
of ground from which they can exclude others, and 
which they can improve after their own fashion. A 
natural suggestion is therefore made that, since land is 
the gift of nature to the human race, a nation like the 



168 OWNERSHIP AND CONTROL OF RESOURCES. 

United States divide it equally among its people, giv- 
ing to each his due share ; or sell the public domain on 
the common account. The injustice of this plan arises 
from ignoring the rights of the next generation. The- 
earth was created for the human race, to be used by 
each generation in turn. Men of Washington's day 
had no better right to land than we, and if this gen- 
eration seize on the territory of the nation and divide it 
among themselves, what is the next generation to do? 
What will the man who is born to-morrow do ? If it 
be said that the land naturally descends from parents to 
children, the reply is, that if we profess to give one a 
title to his share of the land forever, he may exchange 
it for whisky, and have no land to leave his children, 
whereas their natural right to a share in the earth's 
surface is as good as was their father's. A nation 
might properly divide its land among those now living,, 
if it gave each one only a life interest therein. The 
earth was made for man to be used, but no one's nat- 
ural title can extend beyond his lifetime ; otherwise he 
would trench on the rights of the next generation. 

The Land Laws of Moses. — The land laws laid 
down by Moses are admirable in their practical applica- 
tion of these principles. It was fully recognized that the 
land belonged to Jehovah, and that Palestine had been 
set apart for the use of the Israelites. It was divided 
among them — first among the tribes, and then among 
the families of each tribe. The fact that individuals 
had only a temporary interest was recognized by mak- 
ing the land inalienable in each family. It could not 
be sold for a longer term than fifty years, and seldom 



OWNERSHIP OF THE NATURAL RESOURCES. 169 

for so long a period. At the year of Jubilee the land 
of each family was to revert to the seller or his de- 
scendants, and as the Jubilee occurred once in fifty 
years, the average period for which land could be sold 
was only a quarter of a century, or less than the ordi- 
nary life of one generation. If sold immediately after 
a year of Jubilee, it was still for a period of less than 
an ordinary lifetime. By this provision, one could dis- 
pose, roughly speaking, of not much more than his own 
life interest. Had Moses' law been carried out, there 
would have been no landless families in Israel. The 
plan was adapted only to an agricultural people, and 
would not be the best to-day. Its interest consists in 
the fact that Moses, under Jehovah's direction, recog- 
nized the principles here laid down — that the use of 
land belongs to all the people alike, and that there can 
be no absolute ownership by any one. 

The right of each generation to the use of the earth 
extends only through the lifetime of its members. 
The man born a thousand years hence will have the 
same right to a share of the earth's surface as those 
now living. No laws we can make can affect the right 
of a future generation, or any member thereof. A man 
can not rightfully sell the life interest of his grand- 
children. 

Value of Land. — Value is given to a particular 
piece of land, not by the improvements its owner has 
made, but by those which others have made on other 
land around it. A city lot lies vacant for years, pos- 
sibly in the possession of minor heirs. Its original 
owner bought it for a trifle, and has paid nothing but 



170 OWNERSHIP AND CONTROL OF RESOURCES. 

the taxes. Five and ten story buildings have been 
erected about it, and it is now worth a million dollars 
an acre. This enormous fortune is not the result of 
his labor, or of any service he has rendered in So- 
ciety. It is the result of other men's effort and enter- 
prise. The increased value belongs, of right, to those 
who have made the city and given his lot all the value 
it possesses. 

The value of the land in the city depends on the 
country around it — the trade which it can draw, the 
markets it can find for its manufactures. In short, the 
value of all land depends on the people who live on 
and around it, or have relations with it. Not on their 
number alone, but on their habits, tastes, the number 
of wants they have to satisfy, their ability to labor, 
and their moral character. What would an acre of 
land be worth in Chicago, were there no people west of 
Lake Michigan ? Since the value of land is due en- 
tirely to the people, it follows that the value belongs to 
them as the result of their efforts and character. 

The perpetual ownership of farming land in a coun- 
try like the United States is not a matter of great im- 
portance, because of its abundance. We could not 
allow one man to monoiDolize a large portion for a pri- 
vate park, but the absolute ownership of an ordinary 
farm, under the condition that it is kept in cultivation, 
would not give the owner so much advantage over 
others. The real land question is the land of cities 
and favored localities. It is absolutely necessary that 
there be centers of population, and that the combined 
efforts of all people shall go to increasing the value of 



OWNERSHIP OF THE NATURAL RESOURCES. 171 

a little land in those centers. The simplest instance 
is a western county. Let us suppose the land to 
be equally fertile and useful, equally desirable so far 
as the work of nature is concerned. County lines 
must run somewhere, and the county must have a. 
county seat — one place where the public offices are 
located and the courts are held. Suppose its location 
is determined by the convenience of the entire popu- 
lation, and is in the geographic center. The fact that 
the county business must be done here makes it a 
better location for all lines of business ; and the county 
seat is certain to be something of a place. If its lots 
are worth twenty dollars a front foot when farms are 
worth twenty dollars an acre, the added value is given 
by the population of the entire county — by those ten 
miles distant as well as by the residents of the village. 
If added value comes from natural advantages, such 
as a water power or a natural location for a railroad, 
these natural advantages belong to all the people — to 
one -man as well as to another. Everything, therefore, 
that goes to make land worth more in this county seat, 
is the property of the people. 

So far as the value is created by the presence of a. 
civilized and intelligent population, it is justly shared 
among all. So far as it depends on natural advan- 
tages, it belongs to one man as well as another. From 
either point of view, it is plain that all the land and 
its value belong to Society — equally to all men in the 
nation — and that this property right holds through all 
changes of value, since all increase is due to Society. 
It can not be said too often that land must be dis- 



172 OWNERSHIP AND CONTROL OF RESOURCES. 

tinguislied from its improvements ; and that the latter 
are the property of the maker, by the highest of rights. 
When one builds a house, it is his because he made it. 
The fence is his, by the right of his labor. The im- 
provements can not always be removed from the land ; 
but this is not the only instance where people have an 
undivided interest, and where two people or corpora- 
tions own shares in the same thing. The chief value 
of land is in favored spots or localities. The least 
desirable land is usually worth nothing. 

On the assumption that all the value of land is cre- 
ated by Society, it belongs equally to all members. It 
is not a question of how much of the land of a nation 
has value. More than half may still be unoccupied. 
Whatever value is found in the more favored portions 
has been given by Society. 

Practical Methods. — There being no natural 
right of individual property in land, or in any of na- 
ture's resources, those who defend such property do so 
on the ground of expediency. The importance of -in- 
dividual possession is well understood. The necessity 
for some security in possession is equally apparent. 
Improvements can seldom be removed, since from their 
nature they are attached to the land. It is the supposed 
impossibility of making the best use of land, of sat- 
isfying the want of families for homes, and of secur- 
ing one in making permanent improvements that has 
led so many to reject the truth of the natural own- 
ership by the people. Without permitting himself to 
answer the question, Can there be any right of private 
ownership in the Resources of Nature? one naturally 



OWNERSHIP OF THE NATURAL RESOURCES. 173 

jumps to the other question, How will it work ? If 
we can see any way by which all the advantages of 
private ownership of land can be had, it will disarm 
prejudice, and make us more willing to admit the 
truths of the preceding pages, from which there is 
no logical escape. 

In a New Country. — If no private titles to land 
liad been given, and we were at the beginning of a new 
nation, when all the land is " government land," the 
proper method would be simple. The natural way of 
managing the land of the people is to rent it under a 
perpetual lease, with a revaluation of the rent every 
few years. It is the system under which some of the 
best buildings of Chicago have been erected, except 
that the rent is there paid to private owners, instead 
of to the people. 

Land can be cultivated by the government only un- 
der some form of State Socialism. It can not be ab- 
solutely sold, since the rights of future generations are 
the same as those of the present. To lease for a short 
period, or to sell a life interest, prevents proper im- 
provements ; no one will erect a brick block on land 
which he expects to forfeit, and the expectation of per- 
manent possession is needed to satisfy the wishes of 
most holders. There is, however, not the slightest 
difficulty in leasing land with a permanent tenure, the 
rent to be precisely what the use of the land is worth, 
and to vary as its value varies. While we can not bind 
future generations, they would recognize the right of 
the holder to improvements ; and would certainly per- 
mit him to continue to hold the same piece of land on 
payment of what they estimate the annual value to be. 



174 OWNERSHIP AND CONTROL OF RESOURCES. 

If we were at the beginning, in a new country, all 
would be easy; and it is easy enough, now, in the 
United States, with the government land still unsold hx 
the West. Let us start right. This land belongs to 
all the people — to those now living, for their lives, and 
to the people who come after them. Its use is not 
.worth much, if anything, at first. We do not know 
what its use will be worth in the future. We want 
some honest, practical plan by which men can go to 
work on a quarter section and improve it, with a 
reasonable assurance of permanent possession on terms 
which will insure them the results of their own labor. 
So we say to every man who desires, " Take a piece of 
land and improve it ; build on it. It is worth nothing 
now, and you need pay nothing for its use the first 
year. After a year or two, you shall pay precisely 
what the use of the land, aside from your improve- 
ments, is worth. Markets will come with society. The 
land you live on will gain value from the people who 
settle around you and beyond you, and from the prog- 
ress of every part of the great nation. We do not 
know, nobody knows, what the use of this land will be 
worth in twenty years. It may be in the heart of a 
city. What it is worth each year will be determined 
by an assessor. Every year, or few years, there shall 
be a revaluation ; and what that piece of land, apart 
from the improvements, is worth, you shall pay, 
whether it is ten cents an acre in the country, or a 
hundred dollars a front foot in a city. You pay noth- 
ing for ownership; the actual title is in the govern- 
ment ; but the possession is yours so long as you pay 



OWNERSHIP OF THE NATURAL RESOURCES. 175 

what the rent of such land is worth ; and you pay 
only for its annual use." The estimate of this value 
of the annual use would not be more difficult than as- 
sessing taxes at present. The standard is unimproved 
land. A lot with a ten-story building would pay no 
more rent than the lot beside it with a one-story build- 
ing. The farm with a five-thousand-dollar house and 
the best improvements, in the highest state of cultiva- 
tion, would pay no more rent than the farm with no 
buildings. Each pays what the use of the land is 
worth, and no one pays taxes on buildings or improve- 
ments. Improvements are to be encouraged, and the 
best farmer gets the benefit of all he makes. 

It is not likely that an assessor, or board of as- 
sessors, would estimate the average rent of land at 
more than half its real annual value. There would be 
no danger that any man would be required to pay 
more than the true economic rent. The fact that he 
paid less, would give land a selling price ; but that sell- 
ing price would represent only that part of the annual 
rent which Society is unable to collect, through under- 
valuation in giving the holder the benefit of the doubt. 
The right of Society to take full rent would be un- 
doubted. If, for any reason, the government desired, 
to take a piece of ground for public use, as a park or 
street, it would pay the holder the value of the im- 
provements thereon, but nothing for the land. That 
always belonged to Society, and has only been rented. 

The next generation would not be embarrassed by 
such a contract. Its ownership of the land is fully 
recognized. It will see, as we do, the natural right of 
12 



176 OWNERSHIP AND CONTROL OF RESOURCES. 

the holder to the improvements. The government will 
not want the land. If it takes it, it will have the im- 
provements to pay for. If the holder pays the annual 
rent, he will be left in possession. This rent the fu- 
ture will fix ; that is, each year's rent of the land will be 
determined — increased when a particular piece becomes 
more valuable, diminished when it is worth less to use. 
It is strict justice, not benevolence. Society takes 
what belongs to it. The holder pays each year what 
the use of the land is worth. If he fails to pay, his 
improvements — not the land — are sold, and the money 
paid to him ; possession of the land is given to the one 
who buys the improvements, for so long as he pays the 
rent. 

The collection of ground rent would do away with 
the necessity of taxes. There would be some farms 
where the rent would be even less than the taxes the 
farmer now pays on his land and its costly improve- 
ments. There would be many property-holders in vil- 
lages who would pay less in rent for the ground their 
houses stand on, than they now pay in taxes on the 
land and buildings combined. There would be no 
taxes on personal property. There need be no indirect 
taxes. The largest increase of rents would be in 
cities, where land is so valuable. 

There is no doubt that this system should be imme- 
diately adopted with all government land yet unsold. 
There would be no question of present ownership, 
since the government is still the owner. It would at 
once stop the taking of government land for specula- 
tion. No one would 2'o on such land unless he in- 



OWNERSHIP OF THE NATURAL RESOURCES. 177 

tended to make use of it. It would be of no ad- 
vantage to any corporation to get possession of large 
tracts to sell at a higher price. Land would not be 
pre-empted until it was needed. Settlements would ex- 
tend by bringing into cultivation land adjoining that 
already occupied. Settlers would not need to go far 
into the wilderness to get beyond the land already tak- 
en, but not occupied. If a new Indian reservation 
were opened, we should see no such scramble as now ; 
because every settler would understand that he would 
have the rent to pay on all the land he got, and that 
the rent on the choice pieces, and the town sites, would 
be as much as they were worth. The ownership re- 
mains in the people. We violate no principle of right 
or justice ; and no one knows what the public heri- 
tage may be worth in the future. 

The plan of leasing land at a variable rent, to be 
fixed from time to time, is not only the natural method 
for the use of all government land, but it is the only 
escape from State Socialism, on the one hand, and gross 
injustice, on the other. The ground for its advocacy 
is right and justice, not expediency. It would confer 
on a nation the greatest blessing of any economic re- 
form, but this is secondary to the fact that it is the 
only just method of permanent possession of land by 
an individual. 

In Older Countries. — In older countries land is 
not in the hands of the original takers. It has been 
sold again and again, and the government has guaran- 
teed the title, and is as much bound to protect the 
liolder as to pay the national debt. We are in a posi- 



178 OWNERSHIP AND CONTROL OF RESOURCES. 

tion where justice to all parties is impossible. The 
government, which attempted to give a perpetual title- 
to land, sold what it did not own ; but the purchasers- 
were innocent, and must bear no greater loss than those 
who have invested their money in other ways. It 
would be as unjust to take the thousand dollars which, 
one man has paid for a vacant city lot under the en- 
couragement of the laws, as to take the thousand dol- 
lars another man had invested in machinery. Here i& 
the mistake of Henry George. He assumes that be- 
cause the government had no right to sell land in the 
first place, the people may take it from the present 
owners. He argues that if an innocent purchaser has 
bought stolen property, the law requires him to give it 
up to the original owner ; the owner can take his prop- 
erty wherever he finds it. So, he argues, the people, 
as the original and rightful owners, may retake their 
land ; and the private holder is in the position of a 
man who has paid money for personal property to 
which the seller had no title. The two suppositions 
are not parallel. He who buys a horse, buys it know- 
ing that he takes the risk of its having been stolen. 
The land is taken under the forms of law, transferred 
from purchaser to purchaser in accordance with law., 
and its title guaranteed by the government. 

John Stuart Mill, who clearly saw the relation of 
landholders to Society, writing for England where al- 
most all land is rented, proposed that the present rent 
of all lands be recorded; and that the government 
take any natural increase in the future. He recognized 
the right of the holder to the present land values, but 



OWNERSHIP OF THE NATURAL RESOURCES. 179 

demanded that the private absorption of increase of 
land valnes be stopped at once. 

The principle of private ownership has received a 
severe shock by the action of the British Government 
in Ireland. Land was there held on the same terms 
as hi the United States. An Irish landlord had no 
power which is not possessed by every American farm- 
er. The latter is permitted to manage his land him- 
self, or rent it for all he can get. If the tenant fails 
to pay, he can put him off. Yet the English Govern- 
ment has changed this tenure, unquestioned in law for 
a century, into a mere right to such rent as may be 
fixed by the court. The owner is actually prohibited 
from taking possession of land which was his by the 
law of one of the strongest governments in the world. 
It is a more violent change than would be the taking 
•of all landed property by our government. The cause 
was the pressure of the people of Ireland. 

The right of Society to take possession of any and all 
land on payment of its present value is unquestioned ; 
and this right is freely exercised by condemnation for 
public uses, or for such semi-public purposes as rail- 
ways. 

The only practical step which presents no difficulties 
is to stop the sale of public lands. Not another acre 
should go into private ownership. No matter how poor 
or worthless at present, it belongs to the people ; and 
there is no excuse for deeding away the people's heri- 
tage. The Adirondack Mountains were once thought 
to be worthless, and they went into private ownership. 
Now the people want a great park in this wilderness, 



180 OWNERSHIP AND CONTROL OF RESOURCES. 

and they will pay roundly for it. The reservation of 
such great parks as the Yellowstone is a step in the 
right direction ; and, although privileges are given to> 
private parties, the fact that the government owner- 
ship of the land is recognized will be a basis for their 
correction in the future. All ptiblic land should, here- 
after, be leased on the condition that the occupant 
pays whatever it is worth each year, forever ; and that 
if the people need to retake possession of their own, 
they pay only the value of the improvements. Prompt 
legislation of this kind would save to the people mil- 
lions of acres of land yet unappropriated, much of 
which lies among mountains and about the headwaters 
of rivers, and should never be cultivated. It should 
be reserved and protected for the benefit of more 
fertile land below. 

For this generation, at least, the great body of land 
will be held as private property. What the next gen- 
eration will do, it is impossible to foretell. We have 
no right to bind them if we could,- and no power to> 
bind them if we would. 



CHAPTER IV. 

OWNERSHIP OF THE RESOURCES PRODUCED BY 
HUMAN INDUSTRY. 

It is self-evident that Produced "Wealth, being the 
result of labor, is a proper subject of property. The 
idea of property adheres to it. The question is rather, 
To what person does a specified article belong? It 
will be easier to begin with the simplest cases, and pro- 
ceed to the more difficult. 

1. We have seen that there is an innate belief that 
the Indian owns the bow which he has made. When- 
ever we find a man making an article without aid from 
others, we instinctively admit that it belongs to him. 
The most practical application of the truth that one 
owns the result of his own labor is the unexpected one 
of copyright. The Indian takes the sapling for his bow 
from nature's resources. If he did not use it, some 
one else might ; yet we all agree that the bow belongs 
to him. The result of the author's labor is an arrange- 
ment of words. There can be no property in ideas,, 
because the ideas of one man may be those of a thou- 
sand others. If the thinker had not worked out his; 
thoughts to-day, another might have discovered the: 
same mental truth to-morrow. To give him property 
in his idea is giving him a monopoly of what others- 
have the same right to discover as himself. But the 
arrangement of the words of a book is purely the re- 

(181) 



182 OWNERSHIP AND CONTROL OF RESOURCES. 

suit of an author's labor. What is more, no other 
man would ever write with the same arrangement of 
words. A book is therefore purely the result of an 
author's labor which conflicts with the rights and 
'privileges of no one else. There can be no higher 
right of property. The facts that there has been so 
much difficulty in recognizing it — that the laws do not 
protect one in his possession, at least for life, that 
there is so great a difficulty in securing international 
copyright — all go to show how much we still depend 
on force, rather than right, for our ideas of property. 
The freebooter, the robber, the swindler, who gets pos^ 
session of goods and holds them by killing anybody 
who interferes with him, is, even yet, the popular ideal. 
Every attempt to defend property on the ground of 
force leads to Socialism. The many are stronger than 
the one. It is no worse for the people to plunder the 
wealthy man than for individuals to gain wealth by the 
plunder of society. Unless we can find some moral 
right of property, we may as well abandon it. The 
right of an author is one where force does not come 
into play, and is therefore one of the best tests of a 
nation's honesty. Let the farmer or the capitalist who 
refuses to support the moral right of property expect 
to see his own earnings taken by organized Socialism. 
The proper answer to his complaint would be : " Your 
theory vised to be that might makes property. We 
have the might ; hence we have what was formerly 
yours." The many are stronger than the few, and 
organization will give Socialists- a power that no indi- 
vidual ever had. 



OWNERSHIP OF PRODUCED WEALTH. 183 

2. In this day of organized production, almost all 
goods are made in factories, and hundreds of men are 
often engaged in the production of a single article. 
This can not affect the truth that the article belongs 
to the men who have made it ; but the question of its 
division, or the division of the money it sells for, opens 
up the whole subject of Distribution, now one of the 
most important in Political Economy. By Distri- 
bution we mean only the distribution of Produced 
Wealth — that is of the Productions of Human Indus- 
try among the parties to whom they belong. This sub- 
ject will be considered hereafter. We touch it here 
only so far as is necessary to show the right of prop- 
erty in general, without attempting to settle the share 
which comes to each. If each receives the share to 
which the results of his labor entitle him, the shares 
will be very different. 

3. The total product of a factory does not go to la- 
bor. A part is paid to capital, and it is necessary to 
investigate the claim of the capitalist to a share. A 
lone fisherman builds a boat, with extra hours of labor. 
The day's catch, he knows, is due in part to the posses- 
sion of the boat. Two men who are fishing on the 
rocks propose to go with him in the boat and unite in 
matching fish. Will they divide the catch into three 
equal parts ? By no means. All will recognize that 
the owner should have something for the use of his 
boat, since they are enabled to catch more fish by 
means of it, and he owns the boat because he made 
it. If he prefers to stay on shore, the other two will 
give him something for the use of his boat, rather 



184 OWNERSHIP AND CONTROL OF RESOURCES. 

than fish without it or stop to make one. The boat is 
the product of his labor, and if we recognize the right 
of property we must see that the owner is entitled to* 
something for the use of it. This division was com- 
mon in the catch of whaling-ships. The proceeds were 
divided — a certain share for the owners, and the re- 
mainder among the men who had done the work ; the 
largest share for the captain, and a fixed share for each 
man, as previously agreed upon. 

4. The right to the proceeds of one's industry car- 
ries with it the right to exchange this product for oth- 
er goods. But exchange gives rise to opportunities for 
fraud, and it is sometimes against the interests of So- 
ciety. The right of exchange is limited by the gen- 
eral interests of Society, and title to property acquired 
in this way is always open to investigation. To acquire 
any moral right to property by exchange, it is necessary 
that the exchange be between equals. If not, it is not. 
really an exchange, but a persuading of an inferior to 
make a gift. William Penn showed good management 
in giving the Indians a few trinkets for their land : it 
saved him trouble and prevented bloodshed ; but to say 
the trade gave him any moral title is nonsense. It 
would be as correct to say that a confidence man was 
entitled to the fortune which a child had inherited be- 
cause the child had agreed to give it to him for sugar- 
plums. Moral title passes only when exchanges are 
fairly made between equals, and when some propor- 
tional value is given on both sides. 

The right to property acquired by exchange is not 
so certain as to that produced directly by the owner,. 



OWNERSHIP OP PRODUCED WEALTH. 185 

since there is always a chance that the exchange is only 
another name for fraud. A shrewd horse-trader starts 
with a broken-down beast, and ends a series of trades 
with a fine, sound animal ; but his moral right to the 
horse is not quite that of a farmer who has raised a 
horse from a colt. Nevertheless, property would be 
almost worthless without the right of exchange ; and 
as a matter of expediency, if for no other reason, So- 
ciety must protect property acquired under certain reg- 
ulations, except in cases of fraud. There is very lit- 
tle of the Produced Wealth of the country which has 
not changed hands, and the title to nearly all property 
rests in the fact that one has got it by trade from an- 
other. 

Property is not robbery, as the Socialists would have 
us believe, but a good deal of what passes for exchange 
is little better than robbery. No one claims that all 
great fortunes made by buying and selling stocks and 
bonds are made honestly. The dealer sometimes so 
manipulates prices as to make the matter simply rob- 
bery. It becomes one of the highest duties of govern- 
ment to throw all possible guards about such transac- 
tions, to punish fraud, and to give opportunities for 
losers thereby to obtain compensation. 

Disposition of Property after Death. — The 
control of one over his own labor and all property ac- 
quired thereby naturally ceases with his death. Any 
further disposition of it which he desired during his- 
lifetime must be enforced for him. The right of one 
to dispose of his property after death is not so self-evi- 
dent as it may at first seem, and has not been so gen- 



186 OWNERSHIP AND CONTROL OF RESOURCES. 

erally acknowledged as the right or property during 
one's lifetime. In many countries, the disposition of 
one's property after death has been carefully fixed by 
law, so that he had very little control over it. The 
right of bequest has been more fully recognized in re- 
cent periods. It would seem that any full right of 
property carries with it the right to give it to whom 
one pleases, subject to such conditions as the welfare 
of Society makes it necessary to impose. As the right 
of one man is not higher than that of another, so any 
use of property which is an evil to Society may justly 
be forbidden. That is, the right of property is a right 
of possession, but the right of its use is limited by the 
rights of others. If there is any reason for forbid- 
ding one to give large amounts of money to a particular 
person, Society is evidently justified in prohibiting such 
gift, and in limiting one's power in using or disposing 
of his property to avenues not injurious to Society. 

The right to give away property during lifetime, or 
by bequest at death, does not imply the right to follow 
the property longer, or to control it forever. The laws 
very properly impose restrictions intended to limit one's 
control to a comparatively brief period. All together, 
the right of disposal of property after death is now 
greatly limited in all civilized countries, and there is 
reason to believe that a still further limitation would 
be for the interest of all, by which any one person 
should not take by bequest more than a given sum. 
This proposition was first advanced by John Stuart 
Mill, who made a distinction between the privilege of 
disposing of property by will and of the right to receive 



OWNERSHIP OF PRODUCED WEALTH. 187 

property by bequest. He was the first to place the 
limit on the receiving. As countries grow wealthy, 
the danger of the accumulation of enormous fortunes 
greatly increases. By permitting one to make what 
disposition of his property he pleases, except that he 
can leave only a certain amount to any one person, he 
would still have great freedom in its bestowal ; but the 
danger of great inherited fortunes would no longer 
exist. Such laws would often be evaded, and the limit 
imposed exceeded, but they would have something to 
do in forming public opinion, and would usually be 
effective. One would prefer to make a disposition of 
his property within the limits allowed by law, rather 
than run the risk of forfeiting a part to the State. 

The right of persons to receive property which they 
have not produced, and for which they have given no 
equivalent, but have obtained from others by gift or 
bequest, is a right strictly limited by the general wel- 
fare of Society. If it is agreed that large fortunes are 
an injury, it is certainly proper for Society to limit the 
fortune one may receive without labor, leaving hhn free 
to add to it to any extent by means of his own exertion. 
To be effective, the total amount which he should be 
allowed to receive during his lifetime should come within 
the limit of a given sum, so that he may not take two 
or three fortunes through different persons, or evade 
the law by any means. If such a sum were to be fixed, 
it should be liberal, and in a country like this a million 
dollars would be the round sum most likely to be 
named — a sum large enough to enable one to make a 
liberal provision for his descendants and those in whom 



188 OWNERSHIP AND CONTROL OF RESOURCES. 

lie is interested, and yet small enough to break up un- 
usual fortunes as often as they may be accumulated. 

The right of property in Produced Wealth then 
rests — ■ 

(1) On one's right to the results of his own labor. 

(2) His right to a share in what he produces in 
co-operation with others. 

(3) His right to a share in the proceeds of any 
enterprise in return for the use of capital which he has 
saved, and which is used in the enterprise. 

(4) His right to what he gets by exchange, without 
■fraud, and within limits which Society can permit with- 
out injury to itself. 

(5) His right to what others may freely give him, 
or what he may obtain by bequest or inheritance from 
deceased persons, such right being subject to the limita- 
tions which the general interests of Society may impose. 



CHAPTER V. 

CONTROL OF SOCIETY. 

Resources, Population, Who shall control the Re- 
sources — this is the order. The question of who shall 
control the world's resources seems naturally to precede 
that of the best or most economical method of their 
use. The control of Labor, Natural and Produced 
Wealth, is largely one of ownership. We saw that a 
man owns his own labor, and discussed the ownership 
of Natural and Produced Wealth. The control of 
Society does not involve the question of ownership, 
since Society is not the subject of property. The 
question of who shall control it is, however, as impor- 
tant as that of the control of the other three resources. 

The control of Society is its government. The ques- 
tion now before us is simply, Who shall govern ? not, 
What shall the government undertake ? In discussing 
Labor and Wealth we did not undertake to show how 
these should be used, but who should control their use ; 
or rather who should own them, since ownership implies 
•control. The question of how these resources can best 
be used will come up hereafter. So, now, we are to 
consider merely who shall control Society ; the ques- 
tion of what those who control the social organization 
should undertake will come afterward. 

The majority of men do not care so much how they 
are governed as that they are well governed. There 

(189) 



190 OWNERSHIP AND CONTROL OF RESOURCES. 

is no natural right entitling each person to take part 
in the government, such as the natural right of each 
one to his own labor. There is a natural right of 
liberty ; that is, of each one to govern himself and do 
as he pleases, so far as he does not interfere with the 
equal liberty of others. There is no natural right to 
take part in this ruling of Society. Nothing is involved 
but the question of expediency. How can we get the 
best government — not the one which will promote the 
greatest good of the greatest number ; but the one that 
will protect the weakest in his rights, insure justice to- 
all, afford the best opportunities for progress to all, and 
do the best for Society as a social organization ? It is- 
not necessary here to consider all the possible forms of 
government ; all that need to be noticed are included 
under the various forms of a republic, or a constitu- 
tional monarchy, in which a large part of the people 
take part by their votes. It is evident that every man 
who votes is an actual ruler. To confer the privilege 
of suffrage upon any individual is to make him one of 
the rulers of the nation, one of those who control 
Society. The two requisites for a governing power 
are intelligence and honesty, and it is very difficult to 
unite the two in a ruler. One man like George Wash- 
ington, with absolute control, might be able to give a 
nation a better government than with universal suf- 
frage. But few men can be found who would use such 
power for the benefit of the people and the enforcel 
ment of strict justice. The chances of getting such a 
man for a king are small indeed. 

The difficulty with universal suffrage is the lack of 



CONTROL OF SOCIETY. 191 

intelligence and knowledge. The vote of the most 
ignorant counts, as much as that of the competent 
ruler. The people as a whole, however low the moral 
character of individuals, or even a majority of indi- 
viduals, are more likely to try to do right than any 
narrower governing power — than a king or an aristoc- 
racy. The mass of the people is more honest than 
the individuals which compose it. The danger lies 
rather in ignorance. It used to be thought that the 
ballot would be a great educator, but with the power 
of the modern demagogue its benefit is more than 
doubtful. The object of the leader is to get into 
power. By the vehemence of public speech, the most 
dangerous ideas are fastened on the people, which are 
not shaken off in a generation. If any limitation is 
to be imposed on the privilege of suffrage, it should be 
that of education. A class which can have no hope 
of ever taking part in public affairs may be dangerous 
to the State, and the situation of its members is an 
unspeakably cruel one. But an educational qualifica- 
tion, not so high as to forever bar out any man of 
sound mind who chooses to prepare himself for it,, 
would be no hardship, and would act as a powerful 
stimulant to the voter's real ability to help rule.. 
Suppose the requirement to be a knowledge of the^ 
branches usually taught in the common schools. There: 
is no one who could not master them some time in his, 
life, if he chose to exert himself. Such a rule, in the 
United States, might at first disfranchise half the 
voters; but who can doubt that it would give us a 
government far better for all those who were disfran- 
13 



192 OWNERSHIP AND CONTROL OF RESOURCES. 

cliised as well as the others? The moral standard 
would be no lower, and the average intelligence of the 
voting population would be vastly increased. An en- 
tirely different set of men would be chosen as repre- 
sentatives. So far as those who were disfranchised are 
concerned, they can be divided into two classes : first, 
those who feel it something of a disgrace to be de- 
prived of the privilege of voting ; and, second, those 
who care nothing about it. The first class would com- 
ply with the educational requirement within a few 
years. The prize of the suffrage would do more to 
make education universal and popular than any other 
possible influence. As regards those who do not care 
enough for the suffrage to obtain the requisite knowl- 
edge, it is safe to say that they will not be deeply con- 
cerned over the loss of the right to vote. The chief 
«are should be that no impossible standard is set up, 
and no man deprived of the suffrage who has the will 
to obtain it. 

So far as the experience of the world has taught us, 
we may believe that among civilized nations the best 
form of government attainable will be one where the 
power resides in the votes of a very large body of the 
people ; and that the only requirements of the suffrage 
should be intelligence, common morality, and such 
education as is in the power of each to obtain, at some 
period of his life, if not at the earliest age fixed for 
the casting of a vote. The question of the advisa- 
bility of inviting woman to take part in the govern- 
ment need not be discussed here. It probably depends 



CONTROL OF SOCIETY. 193 

on the answers to two questions : First, would it give 
us a better government ? Second, would it be best for 
woman ? 

Having noticed the more important principles con- 
nected with the ownership and control of each of the 
four classes of resources, we should in this chapter 
return for a moment to the question of Socialism, since 
it has as much to do with the control of Society as 
with the ownership of property. 

Socialism is government action which practically 
prohibits every individual from engaging in Production 
or Exchange on his own account. The difference be- 
tween government management of all the business of 
the country, or only certain lines of it, is radical. In 
the one case the government enters a field occupied by 
thousands of others, leaving them as free as before ; 
in the other, it drives all private enterprise out, and 
takes the whole field to itself. The mere management 
of a few public interests by the government does not 
shut out private enterprise. Schools, to be sure, stand 
on a somewhat different footing from Production and 
Exchange, but the public schools of the United States 
do not prevent great numbers of private schools. The 
post-office does not prevent the express companies from 
carrying matter that might go by mail. It is always 
well to have the possibility of competition of private 
parties with government business. But even if the 
government has a monopoly in certain enterprises, it 
leaves all the other business free to the citizen. The 
burden of proof is on those who advocate government 



194 OWNERSHIP AND CONTEOL OF RESOURCES. 

control of any specified business. The lines of busi- 
ness which may properly come under the direct con- 
trol of the government are comparatively few, and 
are likely to involve large interests. They are pre- 
cisely those which would otherwise be carried on by 
great corporations, and probably by monopolies. All 
other lines of business remain, and are so numerous 
that they form in the aggregate by far the greater 
part of all the productive business of the country. 
Suppose that all natural monopolies were turned over 
to public management — that street-car lines, and even 
railways, were run by government officials, as they are 
in many countries in Europe. How much would this 
interfere with the opportunity of the ordinary citizen? 
He would probably have a better chance than before, 
since the government must treat all alike, and large 
corporations would not be able to crush out the smaller 
by reason of discrimination in freight rates. People 
may well say that when a business gets so large as to 
number thousands of stockholders, managed by officers 
elected by their votes, especially if it is of such a na- 
ture that there can be no competition, it would better 
be managed by the government. It may, or may not, 
be wise for the government to extend its business op- 
erations : that is another question. What we wish to 
emphasize here is the radical difference between shut- 
ting the citizen out of all business and the admission 
of the government as another business firm — a busi- 
ness firm which competes only with the large corpora- 
tions, likely to become monopolies ; and which in any 
case leaves the field as free to the ordinary citizen as- 



CONTROL OF SOCIETY. 195 

Tbefore. Socialism is distinguished from all other or- 
ganizations of society. Its characteristic is that it 
shuts out the citizen from production, not that it ad- 
mits the government to some departments. Socialism 
demands that all the instruments of production shall 
be owned by the State, It is here that it is irrecon- 
cilably opposed to Individualism. It allows within 
certain limits, it is true, the use by each one of his 
income in his own way ; but in Production and Ex- 
change it permits no independent action, and here 
absolutely destroys Individualism. 

There are, indeed, three well-marked schools of 
thought: first, the laissez faire, composed of those who 
would make the government merely a police force ; sec- 
ond, those who would have it undertake such lines of busi- 
ness as experience shows can be much better managed 
by public than by private enterprise, and, under general 
regulations, • compel all private business to be conduct- 
ed in a way that will not interfere with the highest in- 
terests of the whole people ; and third, the Socialists, 
who destroy all individual enterprise, prohibit the in- 
dividual from engaging in business, and have every- 
thing done by the State. The difference between the 
last two schools is a hundred times as great as between 
"the second and the first. It would be as great a mis- 
take to call the second Socialists as to class them with 
the laissez faire school. 

As in other instances, extremes meet. Socialists 
and men of the laissez faire school unite in the claim 
that everything which is not laissez faire is Social- 
ism. The former wish to gain adherents by represent- 



196 OWNERSHIP AND CONTROL OF RESOURCES. 

ing that the difference is only one of degree. The 
laissez faire school hope to prevent any further exten- 
tion of government powers by crying " Socialism ! " 
The cry was for a time effective. It was easier to 
make people believe that the management of a street- 
car line by a city " is only a step toward Socialism, " 
which, if taken, " other steps are sure to follow," than 
to discuss the question on its merits. But the cry has 
now come to have the reverse effect from that intend- 
ed, and has done immeasurable injury. People have 
reasoned, " If municipal control of gas-works is So- 
cialism, Socialism must be a good thing." This indis- 
criminate attack by the laissez faire school on enter- 
prises which the people are coming to approve, is one 
of the causes for the remarkable increase in the num- 
ber of good men who call themselves Socialists. Now 
the great mass of common-sense men, who are neither 
Socialists nor in favor of letting everything alone until 
it goes to destruction, need to define their position. 
They must not allow themselves to be classed with So- 
cialists, Christian or any other kind. They are to say 
that, while we do not believe in unnecessary interfer- 
ence with private business, we do not intend to let em- 
ployers alone who work children under ten years of 
age in factories. We do not intend to let the father 
alone who is breaking down the health of his child, to 
throw it, when a man, a burden on society. We do 
not intend to let a corporation alone that is unduly 
oppressive to the people. We propose to move care- 
fully, but we have no hesitation in giving the control of 
any business, like the post-office, to the government 



CONTROL OF SOCIETY. 197 

when there is good reason to believe it will be for the 
best interests of the people. We should show that 
none of these things are in any way related to Social- 
ism ; that the management of natural monopolies by 
the government is not Socialism ; that the government 
of Germany, which owns the railroads, is not Social- 
ism ; and that the city of Paris, as now governed, is 
not a socialistic organization. They should indig- 
nantly refuse to be classed with Socialists, because So- 
cialism is utterlv opposed to their spirit. 

There can be nothing more unfortunate than for the 
people to suppose that control of some natural monopo- 
lies by the government, means that all private enter- 
prise shall be abandoned. It is only the intellectually 
weak man who fears that the doing of some things in- 
volves the doing of everything. 

There is no doubt that the minds of the people have 
been somewhat confused on this subject ; and that many 
advocates of government control of such public under- 
takings as seem necessary, fear that they are Socialists. 
They are nothing of the kind. Neither is a govern- 
ment which engages in necessary public undertakings, 
in as much danger of becoming socialistic as one mail- 
aged on the " let alone " principle. One extreme tends 
to drive people to the other. When the mass of the 
people understand that the highest Individualism does 
not prevent the government from undertaking any- 
thing which is shown to be for the best interests of the 
public, does not prevent regulations for the humane 
treatment of children, or designed to secure their edu- 
cation, the converts to Socialism can never become 



198 OWNERSHIP AND CONTROL OF RESOURCES. 

numerous enough to enslave society. Socialism is to 
be fought on the ground of its tyranny, its proposal to \ 
enslave the minority by the power of the majority, and 
its attempt to prevent the individual from engaging in 
Production or Exchange. 



BOOK IV. 

ECONOMICAL USE OF THE RE- 
SOURCES. 



BOOK IV. 

ECONOMICAL USE OE THE RESOURCES. 

Introduction, . 201 

Chapter I. The Economical Use of Labor, . . 203 : 

Part I. The Constant Employment of Labor, . . 203 

Part II. The Irksomeness of Labor, . . . . - . 209 

Part III. The Division of Labor, 214 

Part IV. The Development of Labor Power, and the 

Prohibition of Certain Forms of Labor, 221 

Chapter II. Economical Use ok the Resources ok 

Nature, 225 



.... 



l.y 



Part I. Permanent Natural Resources, . 

Part II. Consumable Natural Resources, . . . 231 

Part III. Public and Private Use of the Resources 

of Nature, . 234 

Chapter III. Economical Use of Produced Wealth, 212 

Chapter IV. The Use of the Resource of Society, 252 1 

Chapter V. The Purposes for which the Re- 
sources Shall be Used, . „ „ . 256 



BOOK IV. 

ECONOMICAL USE OF THE RE- 
SOURCES. 

This subject is not the same as " Production " in 
the older books on Political Economy, but includes it. 
Our point of view is entirely different from that of the 
older political economists. They treated of the "Pro- 
duction of Wealth,"" its Distribution and Exchange; 
we are treating of the Satisfaction of Human Wants. 
Many of these wants are satisfied, directly, by labor 
without the intervention of wealth at all. The teacher, 
singer, preacher, as well as most persons engaged in 
personal service, satisfy wants directly, instead of by 
the roundabout way of producing something which 
shall afterward be used in their satisfaction. 

The economical use of the Resources is of even 
more importance than their extent. Our Resources 
are greater than in former times. We have dis- 
covered many Resources of Nature unknown to the 
past ; the power of labor is greater in proportion to 
the population ; and the accumulations of Produced 
Wealth are vastly larger, but the better satisfaction of 
wants is due as much to modern methods of using the 
Resources as to their increase. Not only are wants 

(201) 



202 ECONOMICAL USE OF THE RESOURCES. 

better satisfied, but the -world is able to provide for 
far larger numbers of people. Methods of using the 
Resources also determine to some extent whose wants 
shall be satisfied, irrespective of the question of the 
ownership of property. In Book I. we saw what Re- 
sources a nation has for the satisfaction of the wants 
of its people ; in Book II. we considered the number 
of people whose wants are to be satisfied ; in Book 
III., the ownership or control of these Resources ; and 
we now come to the question of their practical use in 
satisfying the wants of the people of a nation. 

We shall find that the simplest plan is to treat of 
the use of each Resource separately. Such treatment 
can be only of general principles. The detailed use 
of the Resources must be determined, each one for 
himself ; and skill in details brings fortunes to many. 
We can not pursue the subject so as to determine how 
a farm or a factory should be carried on. This re- 
quires a knowledge of business, of thousands of minor 
matters. Few men can learn more than one line of 
production. But there are certain fundamental prin- 
ciples, such as a statesman should understand, which 
underlie all business, all methods of production, and 
all methods of satisfying wants. 

We may take up the four great classes of Resources 
in any order, but it will be more convenient, as in the 
last book, to begin with Labor. 



CHAPTEE I. 

THE ECONOMICAL USE OF LABOR. 

Part I. — The Constant Employment op Labor. 

The first requirement for the economical use of labor 
is to use it — to provide for the constant employment of 
all the labor of a country. No waste is so great as 
that of idleness. The chief misfortune of financial 
panics, and of a change in the value of money, is that 
multitudes of men are thrown out of employment, and 
fill the country with an army of idlers or tramps. The 
work that these men might have done is so much loss. 
The loss from the idleness of a thousand men is just as 
real as that from the destruction of a million dollars' 
worth of property by fire. This explains, in part, why 
a country sometimes seems to recover so quickly from 
disasters. Let us suppose a part of a city to be burned. 
Here is a real loss of Produced Wealth. The city 
must be built up again, and the burned structures may 
be replaced by new which are even better than the 
old. Here is a call for additional labor. If there are 
thousands of idle men all over the country willing to 
work for pay, they may be at once employed. Some 
will be put at work in the city where the loss occurred; 
others will be added to the working force of mills in 
other parts of the country, for the production of build- 
ing material, builders' hardware, glass — every one of 
the thousands of articles which go to replace the build- 
ings destroyed. The additional work will not all be 

(203) 



204 ECONOMICAL USE OE THE RESOURCES. 

done by new men. Factories which were running on 
short time may now increase their hours of labor. 
When the city is rebuilt, if we could trace the pro- 
cesses, we might find that it was all extra work ; that 
is, hours of labor which would not have been put in 
had there been no fire. The balance sheet of the 
country may show as well at the end of the rebuilding 
as before the fire. There has been a great loss ; but 
there has been an equal gain in additional labor per- 
formed. The loss has been replaced by men who 
would otherwise have been idle, or worked fewer 
hours. There has been a shifting of property. The 
owners of the buildings have lost, and the workmen 
of the country have gained. 

We have assumed that there was a large body of 
men out of employment, or of men who would work 
more hours. On the contrary, if all men were at 
work before the fire, and the city is rebuilt by labor 
taken from some other form of production, the country 
is so much the poorer. The single truth now before us 
is, the misfortune of the idleness of large numbers of 
men. Labor is a Resource for the Satisfaction of 
Wants which, if not used to-day, is lost ; since the 
work that would have been done to-day can not be 
done to-morrow. Every month of enforced idleness is 
so much loss to the country. 

For it must be remembered that one must live 
whether he works or not ; if he has nothing saved, he 
must borrow ; if he can not borrow, he must live on the 
charity of others. The view of some of the English 
political economists has been too much that of the 



ECONOMICAL USE OF LABOE. 205 

manufacturer, who counts only the wages he pays ; if 
he shuts down his factory, he saves the wages. When 
we stop a steam-engine we, at least, save the coal, but 
when a man ceases work he does not save the necessity 
of food. Practically, it costs the same for him to live 
whether he works or not. It is true that men do live 
on less ; but that is because one never knows on how 
little he can live until he is obliged to make the ex- 
periment. He might live in the same way when he is 
at work, and save the difference between the lowest 
cost of living and his wages. He requires a little 
more food when at work, but the increased cost is not 
enough to be taken into account. It is also true that 
many men when they lose employment at one kind of 
labor do not actually cease to work, but earn a smaller 
sum in some other way, or by labor at home reduce 
their family expenses. But the cost of living depends 
very slightly on whether one is at work or not ; hence 
if he is doing nothing, the present available resources 
for the satisfaction of wants are so much less. The first 
requirement for the use of labor power, then, is that it 
"be constantly employed. As a practical country mer- 
chant observed, " I have always noticed that where all 
the people worked, and were economical, they got 
rich or well-to-do." The steady power of continuous 
labor, year after year, tells. 

It is of the utmost importance, then, that every 
man has a chance to work when he desires, under con- 
ditions which will give him at least the greater part of 
the results of his own labor. Society has in some way 
to keep all persons from starving, whether they work 



206 ECONOMICAL USE OF THE RESOURCES. 

or not. A few are supported by charity, and a few 
live by robbery ; but it would be better if all were em- 
ployed in useful labor. 

The people are the purchasers. The fact that great 
numbers are out of employment prevents their purchas- 
ing - , and leaves stocks of goods on hand. Producing 
must be stopped until the stocks are worked off. It 
is like a row of bricks. Each set of men is knocked 
down one after another, and there is no market for 
anything, because nobody is producing anything, and 
has nothing to buy with. So long as human wants are 
unsatisfied, there should be opportunity for the em- 
ployment of men. Suppose, in a panic when thou- 
sands of men can find nothing to do, we should send to 
each one and ask him what he would buy if he had the 
money ! Now suppose we put this army of the unem- 
ployed to producing just those commodities — to satis- 
fying their own wants ! These men would be at work, 
and these wants would be supplied. The workmen are 
the consumers ; they are their own market. It costs 
them no more to live when at work than when idle, and 
proper statistics should show where labor is most need- 
ed. We may be sure that it is needed somewhere so 
long as any wants remain unsatisfied. 

The direction of production is now mainly deter- 
mined by the demand for goods at certain prices ; but 
the falling off in the demand does not show itself until 
production has been carried too far in one direction. 
It sometimes seems as though there is no demand for 
any goods, that the market in every line is overstocked ; 
yet we have at the same time idle men who want these 



ECONOMICAL USE OF LABOR. 207 

very goods, but have nothing to buy with. There is 
capital enough ; the men must have food and clothing 
in any case, but no business man sees his way, from 
the demand and supply of the market, to undertake to 
set them at work at anything. The ordinary facts of 
demand and supply at certain prices need to be supple- 
mented by public statistics which will help to show 
where these men can be put to work with profit. 
They should be producing something to exchange for 
the surplus stocks of goods which burden the shelves of 
the merchant. The difficulty is not in a lack of desire 
for the goods, but in the fact that idle men are unable 
to exchange their labor for them. 

Financial panics are the means of throwing large 
numbers of men out of employment, and panics are fre- 
quently due to a change in the value of money. Even 
if there is no panic, when the value of money is steadily 
increasing and the prices of goods falling, men hesi- 
tate to engage in business. An increase in the value 
of money is the same as a fall in the price of goods. 
Now, when the prices of all goods are falling, men are 
afraid to manufacture. By the time the returns are 
to be expected the goods will be worth less, and a fall 
in price will absorb the profits. No one knows how 
great the fall will be. Everybody is cautious. Em- 
ployers try to keep on the safe side, but while they are 
on the safe side thousands of men are idle because they 
can find nothing to do. Business men are on the safe 
side because they fear a change in the value of money. 

Labor unions and strikes are a cause of idleness. 
Let us suppose that a strike succeeds : the country has 
14 



208 ECONOMICAL USE OF THE RESOURCES. 

nevertheless lost so much by the long period of idle- 
ness on the part of the men. Suppose that the strik- 
ers are maintained by the contributions of other men 
•of their class; and that, by reason of the labor un- 
ions, these contributing members do get higher wages, 
so that the limited number of men at work actually 
receive as much in wages as would the entire body of 
workmen, strikers included. Nevertheless, the country 
lias lost the labor of the idle men, and they have 
gained nothing. They are no better off under the anx- 
iety of the strike than if they had been constantly em- 
ployed. The people have lost by the strike, and the 
workmen have gained nothing. Idleness is waste, and 
unfortunate, whether it comes by commercial panics, 
when employers are compelled to shut down their mills, 
or by strikes in good times, when men refuse to work. 

The opportunity for more constant employment of 
labor may be found in co-operation, in which the 
workmen own the business ; and perhaps a large part, 
if not all, the capital with which it is carried on. If 
they owned the land, the building, the machinery, and 
other capital necessary, they would come as near being 
independent as is possible. In dull times the returns 
to their labor would be less, but they would at least 
liave something to do, and get all they make. I re- 
alize the difficulties of co-operation as fully as any of 
those who think it impracticable, but the security of 
employment counts for much. 

Labor should also be used without waste of strength. 
Some men will expend twice as much energy as others 
in accomplishing the same result. This is as true of 



ECONOMICAL USE OF LABOR. 209 

mental labor as of physical. There are a few who 
have learned to think directly about the subject in 
hand, and about nothing unnecessary to it. Other per- 
sons are obliged to settle many preparatory and inci- 
dental questions before they come to the real one. 
Such men must cut down a whole forest, and examine 
-each tree, to get the one piece of timber they want. 

Wasted Labor. — It is assumed that labor is to be 
economically employed for the satisfaction of wants. 
Labor may, however, be wasted, when the loss is as 
great as that of idleness. One may work hard all day 
in carrying stones across the road and back again, but 
the world is no better off, and no more wants are sat- 
isfied than if he sat still by the roadside. There is un- 
doubtedly a great deal of wasted labor in consequence 
of misdirected effort. Goods are produced which no- 
body wants, or are made so poorly from lack of skill 
and knowledge that they are useless. 

We have little conception of the wasted labor in the 
world. The employer who turns it in the direction 
where it is all of use, has saved to the world all that 
would otherwise have been wasted, which may be half 
•of all the labor he employs. All that has been said 
about the importance of the constant employment of 
labor has no force except with the implied assumption 
that the labor is to be used for practical purposes, and 
shall aid in satisfying wants. 

Part II. — The Irksomeness of Labor. 

The desire for leisure is as real as any want we have 
to satisfy. Most men dislike to work, and are looking 



210 ECONOMICAL USE OF THE RESOURCES. 

forward to more leisure, and would be glad of shorter 
hours. Thus far we have considered labor power shnply 
as any other force which can be used. If all men pre- 
ferred labor to leisure, we should have only to consider 
how to get the most accomplished by the members of 
a given society. But the workman embodies in him- 
self both the labor power and the wants to be satisfied. 
All through the world's history there has been an effort 
to have one class work, and another class eat, thus 
completing the circle of Political Economy. The 
smaller class which ate, was indifferent to the larger 
class which worked. The modern conception is of a 
people nearly all of whom are engaged in some eco- 
nomic labor ; that is, in an effort to satisfy wants by 
the use of muscle or mind, or both. Where all the 
people work, we have no wants except the wants of 
the laborers; and one of these wants is more leisure 
— shorter hours, longer vacations, less labor. The 
question is, how far we shall ever be able to satisfy 
this general desire for leisure, and at the same time 
satisfy the numerous other wants ; and how this desire 
for leisure compares in importance with other wants. 
When it is a question of food and raiment for one's 
self or family, the common opinion of Americans holds 
up to scorn the man who is unwilling to work for them 
to the extreme of his ability without physical injury. 
But there are many who hold that the provision of the 
common comforts of life ought, in the present stage 
of civilization, to leave some leisure to the workman. 
We observe that most labor becomes more disagree- 
able as the hours per day are increased. There is 



ECONOMICAL USE OF LABOR. 211 

indeed a very general conviction that a certain amount 
of work is for one's benefit. Although one may desire 
leisure for the time being, his judgment tells him that 
for most men, and probably for himself, continuous 
employment for say five hours a day, six days in the 
week and forty weeks in the year, would be better 
than idleness. Eight hours is more than twice as 
irksome as four, and twelve more than twice as irksome 
as eight. So far as mere results are concerned, it is 
now the opinion of those who have collected the fullest 
statistics on the subject that, in the average of mechani- 
cal trades and shopwork, the maximum result is ac- 
complished by about eleven hours of labor per day. 
A farmer with a great variety of duties in the open 
air, including the care of his stock and what are called 
" chores," may perhaps accomplish more in sixteen 
kours than in less. But with the intense strain of the 
factory, nearly all men will do more in twelve hours 
than in sixteen, and in many instances more in ten 
than in twelve. There are a few employments in 
which one can accomplish more in less than ten hours, 
out not many. So far as the results of labor are con- 
cerned, the present hours of labor in most employments 
probably enable the workman to accomplish the maxi- 
mum amount. A further reduction in the hours must 
be for the purpose of satisfying the desire for leisure — 
as real a want as any beyond the mere necessities of 
life. 

Many workmen claim that as four sets of men tend- 
ing a machine for four hours each, can now accomplish 
a hundred times as much work as the same number of 



212 ECONOMICAL USE OF THE RESOURCES. 

men working sixteen hours a day a hundred years ago?, 
they ought to be able to secure a living with fewer 
hours of labor. On the other side, it should be said : 
(1) The saving of machinery is as great as this in 
only a few employments. On the farm, for example, 
while much machinery has been introduced, there is 
much that must be done at which one can accomplish 
little more than was effected fifty years ago. The 
amount of hand labor yet required is very large, and 
the average saving of machinery is by no means so- 
great as at first appears. (2) A large part of the 
gain from machinery is absorbed by an increased pop- 
ulation. Without labor-saving machinery the present 
population could not be supported with anything like 
the degree of comfort of fifty years ago. (3) The 
saving of machinery is shown in the better satisfaction- 
of wants. With all the present hardships, the condi- 
tion of the workingman, and of the entire people, is- 
far better than before. (4) There has been an aver- 
age shortening of the hours of labor. But there is no- 
doubt that the wants of the people, where population 
is not too dense, could be fairly well provided for with 
a further reduction in the hours of labor, especially if 
our industrial system was so perfect that employment 
could always be found by all persons willing to work. 
For the highest satisfaction of wants laboring men 
should demand that the hours and days of labor be re- 
duced, at least to the point of the greatest return ; that 
is, to the point where as much can be accomplished, 
year by year, as with longer days. More labor than 
this is waste. The employer for a month or year may 



ECONOMICAL USE OF LABOR. 213 

gain by it, but the people, in the long run, gain nothing, 
and the laborer has lost the satisfaction and advantage 
which he might have had with shorter days. The most 
important regulation is that of one rest-day in seven. 
There can be no doubt that the average man will 
accomplish more by working six days a week than 
seven. Sunday work is therefore waste work. To 
say nothing of the fact, that one will receive no more 
wages in the end for seven days' work than for six, it 
is also true that he can not earn any more. In a few 
cases where Sunday work is a necessity, the workman 
should insist on another day for rest at some time 
during the week. The Sunday force should have 
Saturday or Monday. One entire day out of every 
seven is worth more for rest than the same number of 
hours scattered through the week. Ten hours a day 
with a Sunday rest is better for any person than seven 
days' work with only eight and a half hours per day 
for seven days. The continued monotony of daily 
labor needs to be broken up. So, a week or two, " out 
of work," at some time during the year is not time lost. 
If the workman does not accomplish more during the. 
year, he at least gains something in increased advan- 
tage to himself. After a Sunday rest has been pro- 
vided for, every shortening of hours is an advantage 
(except to the few who spend the leisure time in dis 
sipation), and with the increased use of machinery and 
improved social organization, a very considerable short- 
ening of the labor day may take place. 



214 ECONOMICAL USE OF THE RESOURCES. 

Part III. — The Division of Labor. 

Adam Smith made the term " Division of Labor " 
classical, and, if the name is not the best, it is almost 
universally understood. It is the dividing of labor 
among different men in such a way that each shall do 
only one thing, or at most attend to a class of similar 
things. So far has the division of labor been carried 
in factories that in the manufacture of mowing and 
reaping machines one man does nothing but drill holes 
in a frame. He learns only the smallest piece of a 
trade, but becomes very expert. Practice shows that 
the gain from this minute division of labor is far 
greater than Adam Smith imagined, or than would 
have been expected from theoretical reasoning. The 
secret of the enormous increase, which seems to have 
escaped most writers, is the automatic action of the 
liuman body. To put forth a conscious effort at every 
movement is very wearisome ; but after we have done 
the same thing a certain number of times, the nervous 
organism takes care of the necessary movements without 
conscious effort. Where one performs an act for the 
first time, he is compelled to give mental attention to 
it ; but continued repetition establishes an automatic 
action, by which the nervous system continues to re- 
peat the motion. In walking we do not think of the 
steps we are takhig. Many a philosopher strolls 
through the country thinking as he walks, hardly con- 
scious that he is walking. It is so with every kind of 
labor. By continually doing one thing, we come to do 
it automatically, as we walk, with no more fatigue than 



ECONOMICAL USE OF LABOK. 215 

the necessary muscular exertion. One may be able to 
•do for ten hours what, if attempted for the first time, 
would weary him in one hour. In addition to this 
automatic action we gain all the skill that conies from 
constant repetition. It is not only the " learning 
how " to do a thing ; it is the doing it until it is done 
automatically, which increases one's labor power. 

The actual gain from the division of labor is beyond 
what is easily realized. It would be impossible to 
satisfy a hundredth part of the wants of the present 
day if each man were to do everytling for himself. 
Adam Smith's famous example of pin-making in his 
day, showed that in a small factory ten men, with in- 
different machinery, could make forty-eight thousand 
pins a day, or four thousand eight hundred to each 
man ; whereas a man working independently could not 
make twenty ; that is, the result of his work was in- 
creased two hundred and forty times by the division 
and recombination of labor. Pins are now made by a 
machine with a far greater saving of labor than in 
Adam Smith's day. 

The division of labor makes machinery possible, and 
the use of machinery renders a division of labor neces- 
sary. A valuable machine can not always be trusted 
to unskilled labor; one must learn its management, 
and the man and the machine go together. Histori- 
cally, the division of labor was introduced by reason of 
the economy of one man's, devoting his time to a par- 
ticular trade; but it has been carried to its present 
minute subdivisions by the introduction of machinery, 
and the setting of one man to tending a machine. 



216 ECONOMICAL USE OF THE RESOURCES. 

The division of labor lias been as productive of in- 
creased results in the highest employments as in the 
more simple operations, and as much gain has been, 
made hi the division of mental labor as in muscular. 
No man now expects to learn everything. He who 
hopes to add to the sum of human knowledge must 
have his specialty. One man gives his entire attention 
to chemistry ; another, to some department of natural 
history. By devoting so much time to a narrow field,, 
one becomes very proficient. His work, if well done,, 
may not need to be done over again, or may be re- 
viewed with comparatively little effort. In economic 
science, he who would add anything to that already 
known must not only know what has been done, but 
must give a great deal of time to original investigation. 
The number of men now devoting their lives to special- 
ties is very large, and it is because of the division of 
the field of knowledge into so many parts that the ex- 
ploration is proceeding so rapidly. It should also be 
noticed that one person may spend many years in pre- 
paring to investigate a specialty, and so make himself 
a very competent investigator. If he were to attempt 
the whole field of knowledge, he could make no such 
preparation. 

An extended division of labor is not practical except 
where there is a considerable number of people. It 
does not require a very large community to need the 
service of a shoemaker, but when we come to a factory 
which employs at least a hundred men in the manu- 
facture of a particular kind of shoe, it is evident that 
there must be a large population to keep these hun- 



ECONOMICAL USE OF LABOR. 217 

dred men at work. So, a large population is re- 
quired to support the business of piano-making. Theo- 
retically, it might seem that a population of a few 
thousand people would afford opportunity for a very 
great division of labor ; but, practically, the division 
of labor to its present extent is impossible except with 
a population of a great many thousand people. It is- 
not necessary that these people all reside in the same- 
city, or even in the same nation. 

How Far Should the Division of Labor be 
Carried ? — The only question concerning the division 
of labor at present is the extent to which it should be 
carried, and here we have to take into account the 
wants and welfare of the laborers as well as their in- 
crease in labor power ; for we shall make a mistake 
wherever we lose sight of the fact that the laborers 
embody in themselves both labor power and the wants 
we have to satisfy. One of these wants, as we have 
seen before, is leisure. Another, is individual devel- 
opment, both physical and mental ; and another is 
agreeableness of the labor performed. 

The division of labor must be supplemented by a 
combination of the scattered parts of the work. Each 
man must be matched against others of a set. If one 
man is to spend his entire time in drilling holes in a 
frame, there must be many others engaged in making 
the frame. If a thousand men are at work in this 
machine shop, there must be hundreds of thousands at 
other employments. The difficulty in this division and 
recombination of labor is to keep just the right num- 
ber of men at each part all of the time. If one class 



218 ECONOMICAL USE OF THE RESOURCES. 

of workmen strike, they stop the set with which they 
are connected. If too many peojjle are engaged in 
one employment, there is soon an overproduction in 
that particular line. More shoes are made than can 
he worn, and enforced idleness is the result. The en- 
forced idleness of one set of laborers reduces their in- 
come and power to purchase the productions of other 
sets, and throws some of them out of employment. 
Eventually things will adjust themselves by a change 
of employment on the part of a portion of the laborers, 
but this adjustment comes only after a panic and hard 
times. Thus, where each man does only a very simple 
thing, and has not learned the other parts of his trade, 
the adjustments must be very close. Then there are 
likely to be too many men of one class in proportion 
to those of others, and some of these must be idle. 
Where each man understands an entire trade, instead 
of a part of the trade, he may do any portion of it for 
which laborers are needed. He may take the place of 
those who fail, or go where there is the greatest need. 
If a young man learns only a part of the trade, in 
later life he is liable to be thrown out of work through 
changes in the methods of production, or through the 
excess of laborers in his department ; and it is not 
easy for him to pick up the other parts of the trade. 
Where one has learned to do a considerable variety of 
things in his youth, and mastered at least the whole of 
one trade, he is able to continue at work in places 
where the division of labor is not carried very far ; and 
in large factories he can fill any one of several places, 
thus insuring constant employment for himself. The 



ECONOMICAL USE OF LABOR. 219 

extreme division of labor tends, therefore, to throw 
large numbers of laborers out of employment when- 
ever anything unusual occurs in the methods of pro- 
duction. It is a question whether the division of labor 
at the present day, considering the loss from necessary 
idleness, is not carried farther than is profitable, even 
when we take into account only the results accom- 
plished. Nevertheless, the enormous gain from a 
division and recombination of labor is so great that 
it is likely to be still further extended ; and we need 
better means for distributing the laborers among dif- 
ferent trades, so that fewer will be out of employment. 

Tends to Belittle the Laborer.— It is evident 
that an extreme division of labor tends to belittle the 
laborer. The man who does one simple thing day af- 
ter day, which he comes to do automatically, will not 
develop himself as did the traditional Yankee, who 
could do anything. The fact that one is able to do a 
considerable variety of things, and does do very many 
things in the course of a year, tends to make him alert, 
to increase his inventive power, and is undoubtedly one 
of the causes of the unusual skill of American work- 
men. When we take the welfare of the laborer into 
account, we can not afford to have men reduced to 
mere machines. The scope of their work must be 
broad enough to give them the skill and general ability 
of the traditional American mechanic. 

The injury to the laborer by the excessive division 
of labor may be partly overcome by working fewer 
hours in the day. His development then depends upon 
how he spends his leisure time. It may be wasted, or 



220 ECONOMICAL USE OF THE RESOURCES. 

may be used in study which will make him more of 
a man than would even a great variety of work. But, 
for the average workman, nothing will more conduce to 
the development of his powers than a variety of work, 
or a range of work wide enough to occupy his mind 
and develop his inventive genius. We could well af- 
ford to sacrifice something in the amount of labor 
which can be accomplished, for the sake of the charac- 
ter of the laborer. 

It should also be noticed that the gain from the di- 
vision of labor decreases very rapidly the farther it is 
carried. There is enormous gain in dividing the work 
of the world into different trades ; and, frequently, in 
a very much more extended subdivision. But after the 
division of labor has been carried as far as is for the 
advantage of the laborer, the subsequent gain from 
more minute divisions is very much less. We might 
almost say that the advantage from the extension of 
the division of labor decreases in geometrical progres- 
sion. And the philanthropist will never desire to see 
it carried farther than is for the benefit of the work- 
man. 

Closely connected with the division of labor is the 
advantage of each man doing what he can do best. 
This is not the same thing as the division of labor. 
There would be great gain from the latter if we 
deliberately put each man to doing what he is least 
fitted for. A few years' practice at the work at which 
he was set would make him far more efficient than 
the best natural untrained hand. Nevertheless, much 
more would be accomplished by apportioning the work 



ECONOMICAL USE OF LABOR. 221 

with, regard to natural ability. It is true there may 
not be work enough of a certain kind for all the men 
who are better fitted for it than for anything else, but 
the poorest must take something for which he is not 
;so well fitted, though there is always a second and 
third choice. 

Part IV. The Development of Labor Power 

and the Prohibition of Certain 

Forms of Labor. 

Labor power, unlike Natural Resources, does not live 
forever ; but is developed and dies with each genera- 
tion. The education and training of men has refer- 
ence both to their power to do something, and also to 
their character and personal well-being ; but, con- 
sidered only with reference to their power of labor, 
their education and training are of the utmost impor- 
tance. More will be accomplished in a generation by 
devoting the first twenty years of the child's life to 
education. This education might include the learning 
a trade. A little development of skill may double the 
laborer's power for forty years. A slight increase in 
intelligence may make the laborer ten times more ef- 
fective. It is undoubtedly for the interest of society 
that the early years of life be given to preparing for 
labor thereafter. Child labor, aside from that in the 
borne, is particularly wasteful. It is unfortunate that 
a child under twenty years of age should be compelled 
to support his parents. Society can not afford to have 
the youth of the rising generation wasted in this way. 



222 ECONOMICAL USE OF THE RESOURCES. 

The labor of children to a moderate extent on a 
farm or at home is often the best part of an education. 
So, also, the learning of a good trade by a boy who 
can not go to school, is the next best thing to school 
training ; assuming, in both cases, that labor is not 
carried to excess. But child labor in factories, and in 
many other conditions, is a different matter. Seldom 
is any trade learned ; the child is deprived of school 
education ; and there is the danger of permanent phy- 
sical injury. When we come to child labor in mines, 
and under circumstances which work physical injury,, 
it is not only abominable, but economically unprofitable. 
That is, the child will accomplish less during his life- 
time than if he had not been injured in childhood. 
The reports of the labor of children in the sulphur 
mines of Sicily show a complete ruin of the child be- 
fore he conies to manhood. The labor of children in 
English coal mines a century ago was not much better. 
The breaking down of the physical constitution of the 
child not only affects his own life, but that of future 
generations. This much, so far as the mere amount of 
work accomplished is concerned. When we take the 
wants of the child into consideration, the case is far 
stronger. The welfare of the child for his entire life 
depends largely on his childhood. 

All unhealthful conditions of labor, such as badly 
ventilated factories, not only decrease the power of the 
laborer, and reduce the amount of labor he will be 
able to perform thereafter, but also detract from the 
satisfaction of his own wants. Life is much harder 
for him on this account, and his satisfactions are fewer. 



ECONOMICAL USE OF LABOR. 223 

More attention will doubtless be given in the future to 
the healthful conditions of the laborer, and to agreea- 
ble surroundings during the hours of labor. 

Prohibition of Certain Forms of Labor. — 
1. Prohibition of child labor in mines and factories. 
In all that is said about the right of a man to control 
himself, we understand one who has reached the ordi- 
nary age of judgment. A child is not a man, and does 
not know what he himself will want as he grows 
older. Society is the natural protector of all children. 
They are to become men, to be voters, and their in- 
fluence on other people will be felt all their lives. So- 
ciety has an interest in their labor power, and can not 
afford to have a child ruined before he becomes of age. 
There is seldom any necessity for State interference 
with child labor at home. The boy on a farm is in 
the open air, and works under conditions which have 
given us some of the ablest men in .the nation. But 
when the child is compelled to work for others than 
his parents, or to work under the conditions of factory 
life, it is time for the State to interfere. A child in 
a town where there is a factory ought to be in school- 
A farm boy should be in school also, but the loss ia 
not so great when he gets the Yankee education that 
comes from farm life. The labor of children under- 
fourteen in mines and factories should be absolutely 
prohibited. For a few years after that period, it; 
should be tolerated only under certain conditions, suchi 
as a half-day in school, or the learning of a trade,, 
and even then the State should see that the conditions 
are healthful, both physically and morally. 
15 



224 ECONOMICAL USE OF THE RESOURCES. 

2. The prohibition of the labor of women in cer- 
tain employments. The welfare of woman is so im- 
portant to Society that her degradation can not he 
permitted. She must not be allowed to work in coal 
mines, as in England years ago, or at certain other 
kinds of labor ; and, if in a factory, the State should 
require the conditions to be healthful. 

3. The prohibition of the labor of men under cer- 
tain conditions. Men can be found who will destroy 
their health for wages. Society can not afford to have 
its labor power broken down unnecessarily, nor to have 
the population deteriorate. Hence every factory should 
be inspected, and the conditions of life therein be made 
as healthful as the nature of the employment will al- 
low. 



CHAPTEE II. 

ECONOMICAL USE OF THE RESOURCES OF NATURE. 

The Resources of Nature, it will be remembered, 
are either permanent or co?isumable. The first in- 
cludes land, the atmosphere, water, etc., and is by far 
the larger and more important portion. The second 
consists of coal and other materials, the natural fertility 
of the soil, timber, wild animals, fish, etc. The eco- 
nomic requirements for the use of the two classes differ 
because the one is not destroyed in the using, but con- 
tinues from age to age ; while the other class is con- 
sumed as used. Some of the Consumable Natural 
Wealth will be replaced in time by Nature, and other 
portions can be replaced by man, while still other 
"varieties, when once used, are destroyed forever. 

Part I. — Permanent Natural Resources. 

The Best First. — It is economy to use the best of 
the Permanent Natural Resources first, and hold the 
rest in reserve. The best satisfy more wants with less 
labor than the poorer, and as they are not destroyed 
in the using nothing is lost. The very best may give 
a few people a fair living almost without work ; while 
from the poorest it would be impossible to obtain the 
most meager subsistence for the laborers. It is very 
unfortunate for any nation to be compelled to use 
the poorest of its Natural Resources, and perhaps no 

(225) 



226 ECONOMICAL USE OF THE RESOURCES. 

nation has ever brought into use every known Re- 
source of Nature in order to support its people ; there 
is always a poorer reserve out of which intense labor 
might still wring a scanty return, though not enough 
to support itself. 

As population crowds a country, it is often neces- 
sary to bring into use the inferior Resources of Nature 
by which wants are much more poorly satisfied. The 
owner of a good farm can provide a much better liv- 
ing for his family than the owner of inferior land. A_ 
city located on a good harbor has the advantage over- 
one on a poor harbor, or one with no harbor at all.. 
The people with pure air and pure water have a great 
advantage over those breathing the miasma of a 
swamp, and using water that is polluted by vegetable 
decay or otherwise. So, the people with abundance of 
room have an advantage over those who must breathe 
the air of the crowded tenement districts. It is an 
advantage to use the best air and the best water. The 
best Resources of Nature are not always used first, 
because they are not always the easiest to get at in the 
beginning. The early immigrants to New England 
came upon the rocky and poor land. The Western 
prairies were reached later, with great difficulty. We 
hear a great deal of late about the abandoned farms of 
New England — abandoned because there is better land 
for agricultural purposes in the West, and we are com- 
ing to use the best Resources of Nature. With the 
dense population of the Eastern cities, these abandoned 
farms are often much more desirable for summer resi- 
dences than the crowded city or the Western prairie ; 



ECONOMICAL USE OF NATURAL WEALTH. 227 

and hence are being rapidly changed from agricultural 
to residence land. For residence land they are the 
best, and follow the law enunciated. 

This economic requirement is violated by land spec- 
ulators in new countries, who often hold the best land 
out of the market for a higher price ; also, in cities 
where private owners hold the land best fitted for 
building purposes out of the market for an increase in 
value. Enterprising builders are compelled to go be- 
yond them, to travel a greater distance or to use less 
•desirable building-sites, while the use of these best loca- 
tions is lost for many years. Indeed, one of the strong- 
est arguments which those who favor the nationaliza- 
tion of land make, is the claim that the best land 
and the best locations would be used first, and only the 
poorer, and the more distant, brought into use as re- 
quired. The proper way to build a city is, beginning 
at a center, to extend business blocks, continually ; 
and residences one after the other as closely as the 
•sizes of lots makes desirable. There should be no 
vacant blocks or spaces, and no unnecessary distance 
to travel. So in the settlement of a new country, it 
is not best to run over the whole land at first, and to 
open a new farm miles distant from other habitations. 
When the new farm is needed, the land adjoining one 
already cultivated should be taken, and so the farms on 
the prairie should extend toward the west, one joining 
the other with no uncultivated space between. This 
would give the advantage of compact society and of a 
sufficiently dense population. When we say" the best 
land, we do not always mean that which will produce 



228 ECONOMICAL USE OF THE RESOURCES. 

the largest crops ; but that which, all things consid- 
ered, is best fitted to satisfy wants. The location of 
the land may be more important, even for agricultu- 
ral purposes, than its quality. In cities the location 
is everything. 

It would undoubtedly be proper for the government 
to require that all land be brought into use as fast as 
needed, notwithstanding private ownership. Should 
the owner be unwilling, or unable, to use it for the 
best interests of society, it might be proper to order 
that it be condemned and sold at a fair price to one 
who would so use it. Land in cities, very necessary 
for building sites, has long been held out of the mar- 
ket through the action of the law in regard to minor 
or insane heirs. Because no title could be given to 
those who would use it for the interests of Society, it 
has been covered with unsightly buildings and used for 
immoral purposes. Some provision for the use of all 
such Natural Wealth should be made. The first ride 
in regard to Natural Wealth is to use the best of it 
first, and to leave the poorest as a reserve. 

It is not always possible to use the best Resources 
of Nature first, because more time is required to put 
them in condition for use than the people at the begin- 
ning are able to bestow. 

Many of the Natural Resources, especially the forces 
of nature, are discovered late in the world's history. 
They were not used earlier because not known, but as 
soon as discovered they add greatly to the satisfaction 
of wants. What was the best, years ago, may become 
the poorest through the discovery of something better. 



ECONOMICAL USE OF NATURAL WEALTH. 229 

For years men were largely dependent on the force of 
the wind to sail their ships. With the discovery of 
the method of using steam, and of the beds of coal to 
produce it, it is found more economical to use coal and 
steam to some extent than to depend entirely on wind 
and sails. We have recently discovered practical 
methods of separating the metal aluminum from the 
clay combinations which hold it. How much man 
gained when he found that he could melt a red ore,, 
and produce an iron which could be hammered into 
shape ! Stone then became useless for cutting pur- 
poses. More recently we have discovered the reser- 
voirs of petroleum beneath the surface of the earth, 
and the rock gas which, so long as it may last, takes 
the place of coal. The rich swamps may be brought 
into use late in a country's settlement. This may 
sometimes happen through ignorance of their utility 
when drained ; but more often because the new settler 
has not time to drain them, or to wait for the sour land 
to be sweetened by the sunlight and air. It is econ- 
omy to use the best of Nature's Resources first, but 
time, frequently more than a year, is required before 
results are secured. The new settler, even if he knows 
the utility of the swamp, has not a great store of Pro- 
duced Wealth on hand, perhaps but little machinery, 
and he must live. If he is poor, he is quite likely to 
take the land he can work the easiest, and get results 
from quickest, even though they be small. After he 
has accumulated a supply of food for a year, provided 
some machinery, and can spare some labor from the 
present needs of his family, he will drain the swamp, 



230 ECONOMICAL USE OP THE RESOURCES. 

adding Produced Wealth to Natural Wealth — drains 
to the swamp — and may find the latter so much better 
that he will abandon the poorest of his old land. 

Use to the Point of Diminishing Returns, but Not 
Beyond. — Natural Resources should be used to the 
point of diminishing returns, and not too far beyond. 
The meaning of the phrase, " diminishing returns," 
was explained in Book II., but unless the reader has 
a very clear conception of it, it would be well to turn 
back and re-read what is there said, for this is one 
of the most important principles in Political Economy. 
By diminishing returns we mean the returns to a given 
amount of labor employed on land. It pays to work a 
farm well. The good farmer gets a larger return for 
each day's work than the poor farmer. The poor 
farmer can frequently double the labor expended upon 
his land and more than double the crop, but there is a 
limit to such increase. After a certain amount of la- 
bor has been expended upon land, additional work will 
produce better crops, but not better in proportion to 
the labor bestowed. If ten days' labor produces 
twenty bushels of wheat, an additional ten days' labor 
will produce only ten bushels, and consequently the re- 
turns to labor have diminished. In the first instance 
we have two bushels of wheat for each day's work, in 
the second only one and a half. It is very important 
that land be worked to the point of diminishing re- 
turns ; because it pays better than when the cultivation 
is poorer, and because it gives opportunity for a more 
dense population, and the advantages of society. It is 
clearly unfortunate to be compelled to work land be- 



ECONOMICAL USE OF NATURAL WEALTH. 231 

yond the point of diminishing returns, because the 
reward of labor is so much less. A dense population 
in an agricultural country is compelled to work land 
far beyond this point, unless food is imported from 
abroad. 

Something analogous to this occurs in the erection of 
a building. There is economy in building a business 
block of several stories ; but a height is soon reached 
where every additional story costs more in proportion, 
either in the cost of building or in the cutting off of 
light and air from other buildings. Tall buildings are 
erected only because of the great value of the land on 
which they stand. If an adjoining lot could be had 
for nothing, the buildings would be lower. It is an 
advantage to have population dense enough to require 
buildings of as great height as can be economically 
erected, but when we go beyond this, the cost of room 
is increased. 



Part II. — The Use of the Consumable Resources 
of Nature. 

1. These should he used without waste, since they 
are destroyed in the using, and are limited in quantity. 
Of the minerals, such as coal and iron, it is certain 
that there is enough for the next hundred years, but a 
hundred years is a very short period in the world's his- 
tory ; the coal was produced by the growth of forests 
for thousands of years ; and the interests of the people 
five hundred years hence should be considered as well 
as our own. To be sure, some substitute for coal may 



232 ECONOMICAL USE OF THE RESOURCES. 

be discovered, but no one knows that it will be discov- 
ered. The only certain method for the production of 
a substitute which we could now put in practice is the 
devoting of large tracts of land to forests, and by the 
slow growth of timber supply fuel for heat and power. 
All this is no reason for suffering the coal to remain 
unused — our interests are just as important as those 
of the people who shall come after us — but it is a rea- 
son for insisting that all such Resources of Nature 
should be used without waste, and the prevention of 
waste should be enforced by government authority. 

Timber. — There is another class of Consumable 
Natural Resources which can be replaced by human ef- 
fort, and some of which nature will replace unaided. 
Of these are timber, wild animals and fish. Timber 
can be grown, but it requires the use of land for many 
years. The time will perhaps come in the United 
States when we shall grow timber as a regular crop, 
as we now do wheat ; but the great expense connected 
with such production is a reason for insisting on the 
protection of our present timber lands. For the effect 
on climate, the forests should doubtless be maintained 
in many mountain regions ; and if these lands of little 
value for agriculture were kept in the possession of the 
government and protected from depredations, timber 
could be sold from them each year. The question of 
forestry has received more attention in Europe than in 
the United States. It will be fortunate for us if we 
refuse to sell the land still in the national possession 
which is suitable for public parks and forests. The 
forests will be a protection for river sources, and 



ECONOMICAL USE OF NATURAL WEALTH. 233 

exert a favorable influence on climate. Once sold for 
a pittance, the national possession of this land can not 
be regained except at more than ten times the price. 
Steps should also be immediately taken to regain pos- 
session of land which ought never to have been sold. 

Fish. — Fish, as one of the Resources of Nature, are 
a very important food supply, both for the savage and 
the civilized man. When the catch is not too great, 
the supply is maintained without human effort or su- 
pervision ; but as population increases it is very easy 
to diminish, and perhaps exterminate, some of the 
most desirable varieties. Hence, supervision of the 
fishing interests is a very proper part of the work of 
any government. Although all fishermen may know 
that reckless fishing is ruinous in the end, even to 
their own interests, the quantity which any one fisher- 
man may take can not be large enough to make any 
perceptible difference, and his course will have no in- 
fluence on that of others. The fisherman whose oper- 
ations will be limited by the law may, therefore, be 
perfectly satisfied with the law which compels others 
as well as himself to observe certain rules. The Unit- 
ed States Fish Commission is now exercising a very 
general supervision over this class of Natural Wealth; 
and is studying the habits of the fishes with a view of 
making this resource of more use to the people. NeAV 
waters are stocked with new varieties, and protection 
given to the finny tribes where they are in danger of 
extermination. Excellent State laws have also been 
enacted, and the future of this form of Natural 
Wealth is very hopeful. Like all the Resources of 



234 ECONOMICAL USE OF THE RESOURCES. 

Nature, fish are, of right, the property of the whole 
people ; and, fortunately, the difficulty of fencing 
them in has made their appropriation by private par- 
ties difficult. Such appropriation has been attempted, 
and to some extent carried out. The public owner- 
ship of all the fish in our waters is the ground of the 
right and duty of the governments, both State and 
national, to encourage fish production, and to regulate 
the manner in which fish shall be taken. 

Any reader will understand that where fishing is 
free, competition will reduce the selling price to the 
cost of taking, so that the people really get their own 
fish for nothing, paying only the competitive price of 
catching and handling by wholesale and retail dealers. 

Part III. — Public and Private Use of the Re- 
sources of Nature. 

The greater part of land is now held as private 
property, and its use controlled by him who has the 
title in fee. If all land were still in the hands of the 
government, the first question would be whether it 
should work the land on public account or lease it to 
private parties. To work all land on government ac- 
count would mean Socialism, since it would necessitate 
State ownership of most other instruments of produc- 
tion. The State would be compelled to improve the 
land, build houses for its employes upon it, own teams 
and farming implements, and erect the buildings in 
cities. The objections already urged against Socialism 
condemn this plan. The fact that Society owns the 



ECONOMICAL USE OF NATURAL WEALTH. 235 

Resources of Nature no more implies that government 
should work them on public account than the owner- 
ship of English acres, or an Irish estate, implies that 
the proprietor works the land with his own hands. As- 
a matter of fact, he rents it. 'A government can lease 
land as easily as an Irish landlord. Neither is there 
any difficulty in giving the occupant permanent posses- 
sion, so that he may be sure of living in the house he 
builds, and leaving it to his children after him. 

The natural, indeed the only, course for the govern- 
ment to pursue, if it retains possession of its land as 
a trustee for the people, is to give a perpetual lease at 
a variable rent — rent which shall be increased or 
diminished, annually, as the value of the land changes. 

In any case, therefore, we may expect the great 
bulk of the Natural Resources to be used by private 
parties, and not by the State. Under the private 
ownership of land, as it exists among us, this is the 
case ; and with recognition of State ownership, the 
land would still be leased to private parties who would 
use it in individual enterprise precisely as at present. 
All the instruments of production would, of course, he 
in the hands of private persons. Private parties would 
make the improvements, erect the buildings, and con- 
trol all the machinery for carrying on production. 
Society would go on as at present, with the exception 
that the rent of the Resources of Nature would be 
paid to the government as trustee for the people. 

Neither ownership of land in fee, nor a perpetual 
lease to private persons at a variable rent, should pre- 
vent the general control of the Resources of Nature 



236 ECONOMICAL USE OF THE RESOURCES. 

by Society. Usually lie who has possession of the land 
may be trusted to niake the best use of it, or at least 
some use which will be for the interests of Society. If 
he cultivate it, he provides food for the multitude ; if 
he covers it with buildings, these are for rent to the 
people, or for use in the production of goods. But 
there are some exceptions. Where land is scarce the 
people may very properly forbid the fencing in of a 
large portion of it for a private park, even by the 
owner. If it is a public park, all can enjoy it ; but 
land for a private park is withdrawn from public use 
for the gratification of a very few people. Where 
land is sown with wheat it does not make so much 
difference to Society about the ownership, because the 
wheat will be produced, and is certain to come on the 
market ; but a private park is practically taken out of 
use for the satisfaction of the world's wants, except 
for those of a single family. Where land is abundant, 
so that every family can have a park if able and will- 
ing to pay the price, there is no objection to such a 
use. The general right of the public to control the 
Resources of Nature must not at any time be lost 
sight of. If land is wanted for public uses, it must 
be taken, with compensation for improvements. If 
the use made of land by its holder is inconsistent 
with jsublic policy, or if it is not used for the satis- 
faction of wants, the public have the right to inter- 
fere. 

Public Use of the Resources of Nature. — 
Not all of the Resources of Nature should be managed 
by private enterprise. In some few instances the gov- 



ECONOMICAL USE OF NATURAL WEALTH. 237 

■eminent may properly attempt their improvement for 
the general good of the people. The most common 
instances are roads, harbors, and public parks. Any 
Natural Resource which can be used by the people in 
common is better in the hands of the government. 
The harbors on the coast are improved by national 
authority in order that they may be used by the ships 
of all nations. So natural water-ways, such as lakes 
and rivers, are properly improved by the government. 
It would be very unfortunate if they should ever be- 
come private property. On the same principle, gov- 
ernments have frequently constructed canals ; and the 
Erie Canal in New York is an example of an arti- 
ficial water-way, built and maintained at the public 
expense, and free to all who wish to use it. This prin- 
ciple of free public water-ways should be extended as 
far as possible. 

The difference between a canal and a railway is 
that it is easy to use the former in common, while the 
latter must almost of necessity be managed by a single 
company. Each boat may be owned by a different 
person, who runs it, under simple regulations, to suit 
himself. 

Country wagon roads and city streets are also used 
in common, and are properly made and maintained by 
public authority. 

Within the last few years more attention has been 
paid to public parks, which the government undertakes 
to improve and maintain for the benefit of all users. 
The famous Yellowstone Park is a credit to our na- 
tion. All land not fitted for private use; all land 



238 ECONOMICAL USE OF THE RESOURCES. 

about the head-waters of rivers, and in mountains., 
where a forest should be maintained, as well as such 
striking pieces of natural scenery as the Yellowstone 
Park, should forever remain in the possession of the^ 
government. A considerable part of the public land 
now unsold might well be retained for park purposes, 
and such land as that of the Adirondack Mountains 
may well be purchased for the maintenance of forests. 

The public park principle is liable to abuse for 
the reason of our unfamiliarity with land under na- 
tional control. Special privileges have been granted 
in many instances, which amount almost to private 
ownership. It must be insisted that any privilege, 
such as that of erecting a building, is for only a limited 
period, and that a variable rent shall be paid, whicK 
shall be increased each year as the value of the 
privilege increases. On the island of Mackinac, in 
Michigan, there is a national park which is practi- 
cally the private park of a few summer residents, and 
maintained by the government mainly for their pleas- 
ure. Building leases have been given without proper 
restrictions. All leases, and all park privileges, should 
be granted only on the principle before mentioned, 
viz.: that of the payment of the full value of the use 
of the land each year, and an increase of the rent as 
the value of the privilege increases. 

There will be, altogether, a very considerable por- 
tion of the Natural Resources which ought to remain 
under the control of the government, to be used by all 
the people in common. The atmosphere is, of course,, 
to be used in common. The waters of lakes and. 



ECONOMICAL USE OF NATURAL WEALTH. 239 

rivers are also to be navigated in common ; and har- 
bors must be maintained at the public expense. The 
extension of the canal system, with roads and streets, 
will retain a considerable portion of the land for pub- 
lic use ; and the wide extension of the park system 
will bring a large acreage of land into public use. 
Parks in cities are the common land of the people. 
All Natural Resources that can be properly devoted to 
public use should be improved and maintained by the 
State. 

We have a good deal to learn in the way of for- 
estry from Europe. In many localities — such as the 
Adirondack Mountains — land should be condemned 
and purchased hj the government. It was a terrible 
blunder to sell it, but it had better be re-purchased be- 
fore the price is carried higher by the increase of popu- 
lation. Narrow strips of land on great lakes and the 
ocean should be reserved or secured for public use. It 
is an outrage that one may fence the people off from 
the sea. Yet all along the Atlantic coast the choicest 
portions of the land are being occupied by private 
residents who control to the water, and virtually own 
the sea. A narrow strip, like a public highway, should 
always intervene between the private residence and 
the water. In cities on the coast, land has become too 
valuable to purchase for public use. The large gov- 
ernment forests, often about the head-waters of rivers, 
under intelligent management would produce a great 
deal of timber which could be cut so as not to destroy 
the forest nature of the land. The sale of the timber 
should be a source of revenue. The acreage of land in 
16 



240 ECONOMICAL USE OF THE RESOURCES. 

highways, public parks, and government forest should, 
in the older States, be vastly greater than it is. 

Special provision should be made for mines. With 
such placer mines as were worked in the early days of 
California, nothing is better than to allow each man 
as many feet of ground as he can work, so long as he 
works it ; but in quartz mining, with costly machinery, 
the government should retain control of the mines, 
making some special provision for their working. The 
leasing of land for agricultural purposes should not 
carry with it any title to the minerals that may be 
found beneath its surface. 

The fish of the sea are public property, and the 
waters in which fishing is carried on should forever be 
the property of the entire people. Where it is nec- 
essary to set aside a particular space of water for such 
industry as oyster fishing, it should be leased by the 
government to those who use it. 

The question of water-rights in irrigation is coming 
to the front in the West. There are vast tracts of 
land worthless except with irrigation. He who owns 
the water controls the land, virtually owns all the 
land the water supplies, since he can put his own price 
on it unless restricted by legislation or previous con. 
tract. Yet water is one of the Resources of Nature, 
which used to be cited by the older Political Econ- 
omists as an example of something without value (ex- 
change value), because so common. All water- works 
for irrigation purposes should either be owned by the 
State, or subjected to a strict control. The water 
should be regarded as belonging to the people, and 



ECONOMICAL USE OF NATURAL WEALTH. 241 

no one permitted to control it except under the power 
of the State to fix a price for the service. There is 
no reason why the water-works should not be held 
by the owners of the land they supply, and managed 
by them as a company. 

With these exceptions the use of the Natural Re- 
sources is best left to private enterprise. Where they 
have not been sold they should be leased to private 
parties at a variable rent, as has been described. 

If this chapter has appeared to the reader to con- 
tain a great deal about government management, it 
should be remembered that this is because the Re- 
sources of Nature are of right public property — the 
heritage of all the people, of each generation as it 
comes on the stage of action. Hence, it is impossible 
-to treat of the use of Natural Wealth without more or 
less discussion regarding government management, 
since the government is the trustee of the people's 
property, and their agent for its use. 

The greater part of the land will always be under 
l^rivate management, if not under private ownership. 



CHAPTER III. 

ECONOMICAL USE OF PKODUCED WEALTH. 

The older works on Political Economy treated of 
the "production of wealth" under the heads of land, 
labor and capital. No term in economic science is- 
more misleading than this same " capital," although its 
popular use in practical business is unexceptionable. 
Capital is that part of Produced Wealth which is used 
in the production of other wealth. Produced Wealth 
may be used as capital one year, and not the next. 
The term capital also leads one to imagine either a 
sum of money or a body of Produced Wealth which 
can be turned to any form of production the owner 
desires. This is far from the case. It is better to 
treat things as they are, and to understand more par- 
ticularly what we are talking about. 

There is no Produced Wealth which can be used for 
every purpose, and very little that has any great variety 
of uses. As a general rule, Produced Wealth must 
be used for its original purpose, or for some other 
that is closely related. A large part of the Produced 
Wealth of the world is in the form of dwellings. 
These can be turned into storerooms, or factories, but 
when this is done at some cost, they are not found to 
be as well adapted as buildings erected specially for 
the purpose. Very little machinery can be used for 

(242) 



ECONOMICAL USE OF PRODUCED WEALTH. 243 

purposes other than those designed. The vast capital 
in roads of all kinds can be used for nothing else. 
The stock of clothing is of no use except to be worn, 
and even the food supply of the nation serves only one 
purpose. Whence, then, conies this popular idea that 
" capital " can be used for any form of production de- 
sired? Simply from the fact that the greater portion 
of Produced Wealth is consumed in the present sup- 
port of human beings — that it supports labor, and 
labor can be turned to the production of almost any- 
thing we will. The power of the capitalist consists in 
this : that he, with the houses, and clothing, and food 
supply at his command, may employ all the laborers 
he can support ; and he can set the laborers at any 
sort of work he pleases. The producer's capital usu- 
ally consists of two distinct parts : first, the buildings 
and machinery ; second, command over the food sup- 
ply and stock of wealth on hand for the immediate 
satisfaction of wants, with which he employs labor. 
This labor he sets at work in the line of production 
for which his machinery is fitted. The use of almost 
all forms of capital, and all Produced Wealth, is fixed 
by its nature within very narrow limits. The wealth 
is rapidly consumed and worn out, and labor can be 
turned to the production of the same or new forms of 
Produced Wealth. Instead of talking about capital, 
then, let us talk of the various forms of Produced 
Wealth, and the use of each. 

The purpose for which permanent Produced Wealth 
will be used is largely determined by the nature of 
the wealth. A cotton factory can produce nothing 



244 ECONOMICAL USE OF THE EESOURCES. 

but cotton goods. If ther.e is a lessened demand for 
the product, the owner in some instances continues to 
run the factory, turning labor in that direction at a 
positive loss, rather than have the mill stand idle. He 
fears either that it may take more injury when idle 
than when running, or that the scattering of the old 
hands, and the loss of customers, may be a greater in- 
jury than a temporary loss in production at market 
prices. He submits to the present loss in the hope of 
some profit in the future ; otherwise he would close the 
mill permanently, and consider the labor invested in 
the production of the machinery as so much misdi- 
rected effort. 

Almost all machinery is limited to the use for which 
it was made. Buildings are limited in their use to the 
purposes for which they were designed, or others very 
similar. Roads are of no use except for travel. We 
may produce almost any kind of wealth in the future ; 
but the wealth now in existence must be used mainly 
for the purposes for which it was designed. 

Produced Wealth is either permanent or consum- 
able. Nothing made by man has the permanency of 
the Resources of Nature ; and none of our Produced 
Wealth is more than relatively permanent. Con- 
sumable wealth is destroyed, or withdrawn from the 
public stock, as soon as used, and must be replaced 
year by year. Hence, it is easier to make any 
changes in the form of Consumable than of Per- 
manent Wealth, because we can use labor to pro- 
duce something different as soon as the old is 
consumed. 



ECONOMICAL USE OF PRODUCED WEALTH. 245 

It is not expected that the changes in the nature of 
the Produced Wealth of a nation will be very great 
from year to year. Although almost the entire food 
supply is consumed, and we might produce a supply 
of an entirely different character, yet practically the 
desires of the people are best satisfied by producing 
very much the same kinds of food as have been con- 
sumed. We need about the same number of bushels 
of wheat this year as last. Fashions in clothing, 
and other goods which are consumed in satisfy- 
ing wants directly, change to a greater extent; but 
it is rather in the form than the essential nature 
of the goods. However, the wearing out, and the 
production of new Consumable Wealth, give oppor- 
tunity for as wide a variation as the desires of the 
people demand. 

We see, here, the mistake of certain merchants who 
have held goods year after year in the hopes of sell- 
ing at the original price. The changes in fashion — 
the people's desires — make such goods almost worth- 
less. The wise merchant disposes of his goods within 
a comparatively short time after their purchase, even 
if it should be necessary to lose' something in the 
sale. He knows the liability of a change in the de- 
mand. It is better, indeed, that the wants of the- 
future for consumable goods be supplied by the pro- 
ductions of the future rather than by saving stocks-. 
from the present. 

Permanent Wealth endures longer, and there may 
be a very considerable change in the form of that 
which replaces it. Indeed, improvements in machin- 



246 ECONOMICAL USE OF THE RESOURCES. 

ery are so rapid that frequently it does not pay to wait 
for a machine to wear out before replacing it with 
something better adapted to the purpose. 

Permanent Produced Wealth should he Used 
Continuously. It is seldom that it is greatly injured 
by use. Most things rust out quicker than they 
wear out. A dwelling properly taken care of will 
last longer if used than when standing empty. It is 
not always possible to use all Permanent Wealth, 
because such use requires labor, which may be more 
profitably employed at something else. This shows 
either that the general course of production has be- 
come deranged, or that there has been more of a 
particular kind of this form of wealth produced than 
was needed, and its production was therefore waste. 

Permanent Produced Wealth should be Used 
ivith as little injury as possible. The needless in- 
jury to this form of wealth is very great. Every 
owner of machinery understands the necessity of care. 
Valuable dwellings are often injured more by a shift- 
less family than their use is worth. It is true this 
.can occur only with comparatively costly dwellings. 
It will not cost as much to build a wigwam as its 
use is worth for a single year. If it be entirely de- 
stroyed by a year's use, the gain is still greater than 
the loss ; and there are some families which are fit 
only to live in a wigwam. A dwelling costing a 
hundred thousand dollars can easily be injured by a 
year's use more than the cost of building a moderate 
house, which would answer the real needs of the 
family equally well. Sometimes a costly building 



ECONOMICAL USE OE PRODUCED WEALTH. 247 

stands empty for the very reason that the owner can 
not get enough to pay for the injury to it by such 
families as offer themselves. One of the difficulties 
found in attempting to improve the condition of the 
lower classes in large cities, is in inducing them to 
take proper care of decent tenement houses. They 
destroy so much that no owner can afford to provide 
accommodations of even moderate cost. 

Savings. — How much of the wealth produced each 
year will be applied to the satisfaction of current 
wants, and how much will be saved for the satisfac- 
tion of future wants, or for use as capital in further 
production ? Usually almost all that is produced is 
expended in the satisfaction of present wants, and a 
very small proportion is saved. Yet in some instances 
men save much more than half, sometimes nearly all, of 
the share of the total product which falls to them. A 
great deal depends on accident. A farmer in a new 
country may find it impossible by any effort to gain 
more than the most meager living for his family; yet, 
in order to gain this meager living, he is compelled to 
improve his farm. He drains a swamp to get a crop 
for the next year, but the swamp once drained is good 
land for all time. He builds his fences for this year ; 
he can do nothing without them, but they are accumu- 
lated wealth ; so that by sheer force of necessity he 
is compelled to accumulate. Had he lived in a city, he 
would not have put his family on this short allowance 
in order to save, and would have saved nothing. The 
necessity of a tool for present work leads to saving to 
pay some one for making it. It is in some such way 



248 ECONOMICAL USE OF THE RESOURCES. 

as this that the accumulation of capital begins. At 
first it is almost always by self-sacrifice, but some- 
times the accumulated Produced Wealth returns its- 
cost every year. Many machines have paid a hundred 
per cent, on the labor employed in their construction. 
Saving depends on habit, on the custom of one's as- 
sociates, and on the probable return one is likely to 
obtain from the use of his savings over and above 
their preservation. 

It should also be noted that saving depends on one's- 
income in comparison with that of those about him, 
and the style of living adopted by the society he has 
chosen. With the majority of people nothing can be 
saved except by the most painful self-denial ; it means 
poorer food, or clothing, or dwellings. 

After one has the necessities of life and can live as 
well as his neighbors, he may easily save. If he go 
into different surroundings, the expenditure of ten or 
a hundred times as much may seem necessary, and he 
may find saving more difficult than with a smaller in- 
come among his old acquaintances. 

A point is frequently reached in the life of some 
individuals where saving requires no sacrifice. By 
various means, millions of dollars of profits have come 
into the hands of a few individuals. There are three 
things one can do with it. First, save to control great, 
business interests, taking more pleasure in business 
than in expenditure after the manner of a Euro- 
pean with an inherited fortune. In this case the 
wealth of the country is increased. Second, he can 
endow public institutions, or otherwise contribute to 



ECONOMICAL USE OF PRODUCED WEALTH. 249 

the benefit of the people. There is in this country a. 
very general idea that one is under obligation to do- 
something of this sort. It is held that his wealth is 
the result of the efforts of others as well as his own, 
that his ownership is not absolute, and that he is in 
some sense a trustee for the people. Universities and 
great libraries have been thus endowed. The wealth 
is here saved, and the interest paid for the use of it 
goes to satisfy the more important intellectual wants 
of many people. Great credit is due to men who use 
a large part of their accumulations in this way. A 
considerable portion of such wealth is also used in di- 
rect contribution for the satisfaction of the wants of 
others. Schools and churches are maintained, mis- 
sionaries are sent to other lands, contributions are 
made to starving peoples. In the third place, one 
may spend all of his annual income on himself and 
family. 

Although the savings of those with large incomes 
in this country are great, the total savings of those 
with small incomes are much larger. We have many 
millionaires, but very few men with an income of a mil- 
lion a year. Suppose there were a hundred. If they 
chose, they could save practically all they receive ; yet 
the total annual saving would be only a hundred mil- 
lions a year. If ten million laborers were to save ten 
dollars a year, each, the total savings would be the 
same. The greater part of the savings are the accu- 
mulation of men of moderate means who wish capital 
to do business. Many negroes, since the war, have 
accumulated comfortable fortunes. Many a poor boy 



250 ECONOMICAL USE OF THE RESOURCES. 

becomes rich, both because lie makes money, and be-' 
cause lie saves it. Small savings can accumulate only 
a small fortune ; one must make a great deal of money 
if be is to save a great deal ; but tlie small savings of 
great numbers of people, continued for a lifetime, 
amount to vast sums in tbe end. 

Savings must be viewed from two standpoints, that 
of tbe individual, and that of the nation at large. 
Every person would like to save a fortune were it not 
for the sacrifice of present comfort involved. Viewed 
from a national standpoint, it is doubtful if this coun- 
try needs a rapid accumulation of Produced Wealth. 
We are well supplied with railroads and machinery. 
With the exception of better dwellings for the mass of 
the people, a dictator might hold that it were better if 
nearly all the product of the labor of each year were 
expended in the satisfaction of the wants of that year. 
It depends, also, in whose hands the savings are. The 
accumulation of small fortunes is greatly to the in- 
terest of the country. The opportunities which capi- 
ital gives to active owners, competent to use it, are 
often worth a hundred times as much as the mere in- 
terest on the sum. The great savings of the rich, by 
decreasing the rate of interest, take away part of the 
inducement for the poor to save. They are not will- 
ing to make the sacrifice necessary to save, when the 
sum invested at interest would bring so little. Yet 
many a good business manager, if he had saved a little 
capital hi his youth, would be able to use it to place 
himself in independent business. Savings depend to 
a considerable extent on the interest which capital 



ECONOMICAL USE OF PRODUCED WEALTH. 251 

brings. Few men realize how much the mere control 
of capital may some time be worth to them. 

The use of the Resources for the Satisfaction of 
Wants by individuals, is a matter of practical busi- 
ness, involving endless details and training. The 
method of use determines one's financial success in 
life ; determines how well he is able to provide for 
those dependent on him ; and how much he is able to 
do for others, and for the world. Some men become 
rich by using the resources at their command, even 
though they be very meager ; other men suffer pov- 
erty, although they were fortunate in the beginning in 
having control of far more and better resources than 
their successful neighbor. A great deal depends on 
what one has at the beginning, a great deal on luck ; 
but, beyond this, one's material success is due to the 
skill with which he uses the resources here enumer- 
ated. Questions of morals, of course, enter in ; and 
we are not to forget that one sometimes succeeds by 
dishonest and immoral use of the resources of which 
he obtains control. The promoters of the Louisiana 
lottery are supposed to have accumulated enormous 
fortunes out of money taken from those who gambled 
with them. The gambling-tables at Monte Carlo are 
very profitable to their owners, though they have 
driven many lives to suicide. 



CHAPTER IV. 

THE USE OF THE RESOURCE OF SOCIETY. 

One of the merits claimed for this work, is that it 
takes account of Society as the means of satisfying 
iuman wants, as well as the productions of human in- 
dustry. We have seen in Book II. how important is 
the character of the population of any country. Some 
society is like a heap of waste refuse, not only useless, 
lout unsightly, and in the way. Good society is one of 
"the most important means for the satisfaction of wants, 
after the simple craving for food has been satisfied. 
In this book we have to do only with the use of such 
society as happens to exist in any nation. 

There is, first, the necessity of separation. The 
convicted criminal must be placed in penitentiaries, 
workhouses or reformatory institutions ; otherwise he 
is a constant menace to society. There is, in addition 
to this, a criminal class which the future will doubtless 
deal with. An habitual criminal may be all the more 
dangerous for having spent a few months in jail Or the 
penitentiary. We shall, perhaps, find it necessary to 
separate from society every habitual criminal, until 
there is some reason for believing that he has so far 
reformed as to be safely trusted at large. 

In a perfect society, each individual or family, while 
tenacious of its own rights, would be equally unwilling 
to interfere with the rights of others. They also have 

(252) 



USE OF SOCIETY. 253 

some conception of what those rights are. With so- 
ciety as at present constituted, even in the United 
States, it is necessary to insist upon quite strict regula- 
tions in order to make it of any value in the satisfac- 
tion of wants. The majority of the people have no 
thought that anything is disagreeable to others which 
is not disagreeable to themselves. A very large num- 
ber have no hesitancy in inflicting upon others what is 
•disagreeable even to themselves. The protection of 
individual rights, where people are massed together as 
they are in cities, doubtless requires very much stricter 
regulations than at present exist. The effort of the 
future will be to make a city a desirable place for all 
classes to live ; and when this is done, wants will be 
much better satisfied, even with the same income as at 
present. Unnecessary noises will be abolished. There 
will be some means of rapid transportation which will 
not make every house within the vicinity of the line an 
unfit place to live in. The ringing of bells and blow- 
ing of steam whistles between certain hours will be 
prohibited. Disagreeable street cries will cease. The 
posting of unsightly advertisements on blank walls, 
and the disfigurement of natural scenery by advertise- 
ments, will be forbidden. The distributing of hand- 
bills on the streets, now prohibited in many cities, will 
then cease everywhere. The model city of the future 
will be one where a person can walk the streets unmo- 
lested, unasked to purchase what he does not want, 
undisturbed by street cries and unnecessary racket. 
Beggars and the unfortunate cripples will also be re- 
moved to places where they can have proper care ; it 



254 ECONOMICAL USE OF THE RESOURCES. 

will be recognized that those who are disfigured and 
repulsive in appearance are entitled to the support of 
the community, which will take pleasure in knowing" 
that they are cared for in proper institutions ; hut they 
will not be permitted to thrust themselves into the 
view of every passer-by to work upon his sympathies 
in order to beg. 

For the sake of all persons, sanitary regulations* 
must be enforced against those who have no regard 
for cleanliness themselves. In short, a city must be 
made a habitable place to live in, with cleanly and 
healthful surroundings for the poor as well as the rich. 
The difference between cities naturally depends on 
the character of the people who inhabit them, and 
the way in which they are compelled to live. The se- 
curing of advantages described will be worth more to 
any workingman than a considerable advance of his- 
wages, and will be worth still more to those of larger 
incomes. 

It is said that men ,can not be made moral by legis- 
lation. While this is true in one sense, it is also true 
that legislation and the enforcement of law have a 
great deal to do with the morality and the social life 
of any people. The lowest immoral classes can be 
prevented from outward acts. The lower social classes 
can be compelled to live in a way less disagreeable to 
more respectable neighbors. Vice can be compelled 
to hide itself from public gaze. The very compelling' 
of the people to live outwardly in a certain way for a 
generation or two, would most powerfully affect their 



USE OF SOCIETY. 255 

character, and what is done under compulsion by one 
generation, may become the habit of the second. 

A great deal can, therefore, be done to make society 
outwardly more respectable ; and to make it of far 
more use in the satisfaction of the wants of all. A 
great deal can be done in repressing natural outward 
manifestations of those who occupy the place of social 
rubbish and disagreeable waste. 

A still more important matter is in the development 
of a better society in the future. We can not do 
much with a savage unless he is caught young ; but 
under proper influence children of even the most ob- 
jectionable classes may be less a curse to the body pol- 
itic than their fathers have been, and may even come 
to be good citizens. The public schools, the churches, 
and missionary enterprises, are doing a great deal in 
this direction, and are our chief dependence. 



17 



CHAPTER V. 

THE PURPOSES FOR WHICH THE RESOURCES SHALL 
BE USED. 

What goods shall be produced? What wants shall 
be satisfied? What direction shall the world's produc- 
tion take, and how shall its industry be employed? 
Shall we dig for diamonds in distant lands ? Shall we 
erect costly State-houses ? For what purposes shall 
these vast resources of nature, of labor, of goods pro- 
duced by man, of society, be used ? It is one thing 
to use the resources without waste, and so as to accom- 
plish the greatest results ; and another to determine 
what shall be the end of all this use, what sort of 
wants shall be satisfied. 

We have already seen that the purpose for which 
jnost Produced Wealth shall be used is limited by the 
nature of the wealth itself. A paper mill can not 
well be used for anything except to make paper, yet it 
may make paper of various grades, as desired. The 
purposes for which most Produced Wealth may be 
used is limited, not determined, by the nature of the 
wealth. 

To a less extent this is true of Natural Wealth. 
All agricultural land is not fitted for wheat or sugar 
cane, yet most land may produce a considerable va- 
riety of crops. 

It will be sufficient if we consider the single Re- 
(256) 



WHAT SHALL BE PRODUCED. 257 

source of Labor. The purpose for which any one Re- 
source is used determines that of the others. If a 
given acreage of land is to be set aside for the pro- 
duction of wheat, this means that a certain amount of 
labor and capital must be used in the same production. 
If a woolen factory is to run continuously, it means 
that labor must be employed in this mill, and that, 
somewhere, land must be devoted to sheep-raising. 
Since land, labor and capital are combined in almost 
every form of production, when we determine the use 
of one of them we have practically fixed the use of 
the others. 

It is more convenient to select Labor rather than 
either of the other resources, because labor is more 
readily directed. The purposes for which the other 
resources will be used will need no further considera- 
tion than has been given in previous chapters. 

The Purposes for Which Labor Shall Be 
Used. — The purposes for which the Resources are 
used may be even more important than the manner of 
their use. We may have a hundred thousand men 
for a year digging holes in the ground, and at the end 
we have only holes in the ground. If these men are 
employed in digging the Nicaragua canal, we have at 
the end a canal connecting oceans, of great value in 
satisfying future wants. There is a great deal of mis- 
directed effort and waste of labor. 

The class of wants satisfied and the number of peo- 
ple enabled to live in comfort also depend upon the 
purpose for which labor is used. If a large portion 
of the labor of a nation is expended in personal ser- 



258 ECONOMICAL USE OE THE RESOURCES. 

vices, as in some of the old countries, there is only the^ 
satisfaction of the wants of a few people. So, also,, 
if labor is expended in the production of costly wines 
and expensive luxuries. A thousand men may be em- 
ployed in the production of some little luxury for the 
prince or queen. On the other hand, if the greater 
portion of the labor of a nation is expended in the 
production of food, clothing, and the common comforts 
and necessities of life, the very abundance of these 
makes them cheaper, and brings them within a price 
that the multitudes can afford to pay. This, however, 
is only saying that where the entire people are engaged 
in satisfying their own wants, they will be more gen- 
erally satisfied than where the majority are laboring 
to provide something to satisfy the wants of the few. 

The direction of labor is usually determined by the 
employer, rather than by the laborer. The control by 
the great captains of industry probably brings about 
far greater results than could be attained if the direc- 
tion of labor were in the hands of the laborers. The 
employers are governed, not by the thought of satisfy- 
ing the wants of as many people as possible, but of 
providing what the people will pay most for ; and 
where there is great wealth in the hands of a few who 
are willing to expend it for their personal pleasure, 
these directors of labor will be sure to turn it to the 
satisfaction of their wants, rather than to the wants of 
the people who have nothing to pay with. 

It is true that various motives besides profit act to 
induce one to carry on business, and mistakes are fre- 
quently made ; but on the whole, the tendency is. 



WHAT SHALL BE PRODUCED. 259 

to produce what the people want most, in proportion 
as they have the means to purchase' it. Let there be a 
widespread desire on the part of the common laborers 
of the country for any article for which they are will- 
ing to exchange labor, and it is sure to be produced. 
The desires of the people, in a general way, settle what 
shall be produced by the labor of the country. The 
laborer can have bread, beer or clothing produced for 
him, just as he pleases. 

If we could control the wants of the people, we could 
determine what should be produced. If the desire for 
beer and whisky could be eliminated, the production 
of these liquors would cease ; the grain would be used 
for food, and the labor of all the men in distilleries, 
wholesale liquor stores and saloons would be turned 
to the satisfaction of other wants. 

Let us suppose a man with an income of a million 
■dollars a year. This is equal to commanding the labor 
of more than a thousand men, including superintend- 
ents. The way in which he uses his income decides 
the direction the labor of these men will take. If he 
decides to spend it all in building another railroad, 
there will be a demand for railroad laborers. Sup- 
pose he determines to spend all his income on himself 
and family. A thousand men must now work for him 
in some way, and he will determine how. He will 
likely take a considerable number of them for his ser- 
vants. If he drink costly wines, he will turn labor to 
their production. If he lives in Europe, such goods 
as the people of Europe most need will be sent over 
to pay the bills of exchange he draws. His manner 



260 ECONOMICAL USE OF THE RESOURCES. 

of life in Europe will determine the direction of labor 
there. If he maintain as many servants as an En- 
glishman of equal income, he turns more labor into- 
personal service. If he loses his money on horse- 
races, he increases the class of gamblers. If he gives- 
his money to a work like that of General Booth, he- 
sets idle men and semi-criminals to producing food, 
clothing and shelter for themselves. Whatever he 
does, whether commendable or otherwise, decides what 
a thousand men shall do — decides what shall be pro- 
duced, what direction labor shall take. 

What this man with his income of a million dollars- 
a year does on a large scale, other men do on a smaller 
scale. Every man thus has an influence in directing 
the labor of the world to honorable or dishonorable 
employments, to pleasant or disagreeable work, to in- 
dependent production or to menial service, or to the 
education and intellectual culture of the age. If he 
chooses to keep servants to the number of many- 
Southern households in the days before the war, with 
no better appliances than of that time, he puts more 
people into personal service ; if he adopts all the 
modern appliances of housekeeping, he sends more 
men to manufacturing. The whisky drinker puts 
men to producing whisky ; the smoker is the man 
who directs others to make cigars. These things are- 
produced for one more promptly than if he ordered 
his slaves to make them. 

1. The Use of Labor in Satisfying Wants Di- 
rectly. — A very large portion of all the labor of 
the nation must be expended in satisfying wants di- 



WHAT SHALL BE PKODUCED. 261 . 

rectly, without the intervention of any material pro- 
duction. The United States census reports show that 
about one-fourth of those reported as having any em- 
ployment are engaged in professional and personal 
services. When we add to this the labor of wives en- 
gaged in household duties and the care of the family, 
which labor is not reported in the census, we see that 
nearly one-half of all the labor of the nation is ex- 
pended in satisfying wants directly. 

2. The Production of Consumable Goods to 
Satisfy Wants. — Next to satisfying wants by labor 
directly, comes the producing of something that will 
satisfy wants. The savage lives largely on the Re- 
sources of Nature ; civilized man produces goods. 
For the production of most goods considerable time 
is required ; usually from one to two years elapses 
from the beginning of the process of production from 
the soil to the completion of the finished product. A 
considerable store of consumable goods is, therefore,, 
necessary. We eat last year's wheat ; and in the 
winter wear clothing made in the factories the summer 
before ; the material for the clothing was probably 
produced more than a year before it was manufac- 
tured. Labor is, therefore, directed not so much to 
producing something for immediate consumption, as to 
replacing the great stock of consumable wealth as fast 
as it is consumed. If we are able to increase this 
stock faster than population increases, there is oppor- 
tunity for the better satisfaction of wants in the 
future. 

The quantity of Consumable Produced Wealth 



262 ECONOMICAL USE OF THE RESOURCES. 

which it is profitable to accumulate is decidedly 
limited. The storage of grain costs something. It 
is much better to have good wheat land, and skilled 
farmers able to produce wheat year by year as needed, 
than to have a great store. Only a prophetic knowl- 
edge of the future, such as Joseph had, would justify 
the accumulation of a seven years' supply. Many 
varieties of food products must be produced year by 
year, because they are of a perishable nature. Even 
clothing depreciates in utility through a change of 
fashions, and it is far better that the production of 
each year be worked off as closely as possible. The 
preservation and storage of all goods is costly. Better 
far are factories, and skilled workmen able to make 
the clothing year by year, as it is needed by the peo- 
ple. We need, therefore, only a limited stock of Con- 
sumable Produced Wealth ; just enough to last until 
more can be produced, and to tide over any possible 
failure in production. 

Hence, if we are able to direct a larger portion of 
the labor of a nation to the production of consuma- 
ble goods, it will result in the better satisfaction of im- 
mediate wants. The effect of such increased produc- 
tion might at first be to increase slightly the stocks on 
hand, but this increase would soon result in greater 
consumption of these goods by the people. We draw 
as much out of our reservoir as we put in. 

3. Accumulation of Permanent Wealth io7dc7i 
Satisfies Wants Directly. — By far the larger part of 
this form of wealth is in dwellings and public build- 
ings. At first, the man in the new country must live 



WHAT SHALL BE PRODUCED. 263 

in a " dug-out," a c'ave dug in the hillside which he 
can fashion in a few days, or in a log house which 
his neighbors help him to build in a not much longer 
period. Neither of these shelters is very permanent, 
though the log house may be an excellent dwelling for 
several years. If one is able -to erect a substantial 
stone house, it may afford a dwelling-place for him and 
his children after him, perhaps for centuries. A well- 
built house, the modern improvements, the water and 
gas fixtures, the sewerage, the finish, all go to satisfy 
wants better, not for the present alone, but for a life- 
time. If one were compelled to build a house every 
year, it would necessarily be a cheap affair ; because it 
is permanent, one can afford to give the work of years 
to its completion. 

Public buildings come in the same class as houses. 
They satisfy the wants of officials, and those of the 
people for the means of government, and their archi- 
tectural appearance is a satisfaction of aesthetic wants. 
Church buildings and schoolhouses belong in the same 
category. The school buildings satisfy wants directly 
as well as the teacher. When we have added to 
buildings for the purposes named above, works of art, 
we have included most of the Permanent Produced 
Wealth which satisfies wants directly. 

How much of this class of wealth will be pro- 
duced ? How much can be advantageously produced, 
provided the labor can be spared? Ordinarily one 
house is sufficient for a single family. Only a few 
desire two or three. It is the demand for better 
dwellings that requires so much of the spare labor of 



264 ECONOMICAL USE OF THE RESOURCES. 

the nation. Poor buildings are constantly being torn 
down to make room for good ones. To provide for all 
the people as good quarters as they would take care 
of, woidd require far more labor than to produce the 
necessary reserve supply of food and clothing. We 
hope for progress in erecting better dwellings, with 
sanitary surroundings. But such buildings are of ad- 
vantage only so fast as the people learn to use and 
care for them. One of the difficulties found by phil- 
anthropic people of wealth in large cities, is in secur- 
ing tenants who are fit to use the buildings. The ten- 
ants seem to prefer the squalor of the old, filthy tene- 
ment houses, and if left to themselves soon reduce the 
new to the condition of the old. A wigwam is good 
enough for an Indian, as an Indian ; if he becomes 
civilized, he needs a better home. 

The proportion of the labor of the country which 
will be expended in the production of Permanent 
Wealth which satisfies wants directly, will depend 
on how much can be spared from the present support 
of the people in the way they think necessary to live, 

4. Permanent Wealth which Satisfies Wants In- 
directly.— -The types of this are machinery, buildings 
for manufacturing and commercial purposes, roads and 
other equipments, and vessels for navigation. Labor 
will usually be taken from other purposes for the pro- 
duction of machinery whenever the latter is found to 
be profitable. Machinery which a few men can make 
in a year may enable ten men thereafter to do the 
work of a thousand. 

Is there any limit to the profitable production of 



WHAT SHALL BE PKODUCED. 265 

machinery ? It is evident that we may have all the 
machinery that the laborers can use. The farmer 
needs only a certain number of plows ; one mowing- 
machine for a small farm is as good as a dozen. One 
sewing-machine in each family is usually all that is 
needed. Only about so much cotton cloth would be 
used in the United States if people had all they de- 
sired ; and there are probably cotton mills enough in 
the country, by running full time, to produce that 
quantity. There is certainly a limit to the number of 
machines of any one class which it is worth while to 
build. 

Wants, however, develop very rapidly when there is 
opportunity. Machines are continually invented which 
will produce something for which a new want can be 
created, or something that will satisfy wants at a cost 
which can be afforded by a greater number of people. 
There is certainly a limit to the machinery that can 
profitably be provided for any given population, but 
the limit is far beyond us. 

The building of roads, railroads and canals has 
in the United States required a large portion of the 
labor which could be spared from the satisfaction of 
immediate wants. This class of Produced Wealth 
follows the same law as machinery. It is sometimes 
said that capital is sunk in railroads ; what is sunk is 
labor, labor which might have been unemployed, or 
employed in the satisfaction of present wants. 

A certain amount of labor is devoted to improve- 
ments on land, which yield their return in the future. 
If the farmer can spare time from making a living for 



%6Q ECONOMICAL USE OF THE RESOURCES. 

his family, or can put in a little extra labor in the 
course of a year, he may drain a swamp which will 
hereafter be the best land he has. This is labor de- 
voted to accumulation as much as in the production 
•of machinery. 

Under the last division we have enumerated the 
principal classes of Permanent Produced Wealth 
which satisfy wants indirectly. They are the forms 
by means of which the vast accumulations of wealth 
in modern times have been rendered possible. For 
what purposes could labor be used in ancient times be- 
yond the satisfaction of present wants ? We have 
seen there is nothing to be gained by the storing up 
food and clothing, and other Consumable Wealth, be- 
yond a supply for a year or two. Without machinery, 
and modern railroads and modern ships, little re- 
mained but buildings. Great castles were erected, 
but there were no forms of wealth known in which it 
was possible to store up the labor of the present for 
the future, to the extent it is done at the present. 
People worked hard enough. Slaves built the great 
pyramids of Egypt, a useless toil of thousands of men 
for weary years. Could the same labor have been 
used in the construction of modern machinery, the pro- 
duction of the future could have been greatly in- 
creased. The few persons in control, however, cared 
nothing for the wants of the people, even if they had 
been able to produce modern machinery. 

All the labor expended in satisfying wants directly 
goes, of course, to the satisfaction of immediate wants, 



WHAT SHALL BE PRODUCED. 267 

and nothing is accumulated ; although the condition of 
the people may be greatly improved by education. 

Future accumulations of Produced Wealth will be 
in the form of Permanent Wealth, both that which 
satisfies wants directly — such as dwellings, public 
buildings, parks, works of art, etc. — and that which 
satisfies wants indirectly — such as tools and machin- 
ery, roads and facilities for communication and trans- 
portation, improvements on land, etc. Even now we 
are talking of expending a hundred million dollars in 
building the Nicaragua canal. Such an expenditure 
is equal to the labor of an army of two hundred thou- 
sand men for a year, either on the ground or some- 
where else. 

To one who has the welfare of the race at heart, the 
question arises whether we have not reached the point 
where it were better to turn more labor to the satisfac- 
tion of immediate wants. The erection of dwellings 
provides for immediate needs and also for wants in the 
future. It is doubtful if there is any real need of a 
rapid addition to the present stock of the machinery 
of the world's production. There is need of a much 
better provision for the wants of the great mass of the 
people at the present time. The philanthropist would 
probably desire to turn surplus labor, for the next few 
years at least, to the more comfortable housing of all 
the people. Such housing, especially in cities, neces- 
sarily includes water supply, sewerage, and many sani- 
tary arrangements. He would also direct effort to the 
securing of pure and wholesome food ; which even the 
rich find it difficult to procure. He would relieve 



268 ECONOMICAL USE OF THE RESOURCES. 

children and persons under sixteen or eighteen years 
of age from labor outside the family to which they 
belong ; and would turn more labor to the satis- 
faction of wants directly, in the teaching of these 
young people in the schools, so as to better fit them 
for life. If this, and other labor for the immediate 
wants of each year, prevented the rapid increase of 
wealth, he would not greatly regret it, believing that 
there is so much Produced Wealth that its increase, 
except in the case of dwellings, is of much less impor- 
tance than formerly. 



BOOK V. 

EXCHANGE. 



BOOK V. 

EXCHANGE. 

Chapter I. How Exchange Satisfies Wants, . . 271 

Chapter II. The Price of a Dollar, .... 275 

Chapter III. Exchange Values, 280 

Chapter IV. The Limits of Value in Exchange 

are Fixed by Values in Use, . . 285 

Chapter V. Supply and Demand, 289' 

Chapter VI. Cost of Production, ...... 296 

Chapter VII. Monopoly, . ......... 306 

Chapter VIII. Money, 312 

Part I. Qualities of a Good Money, 313 

Part II. What Determines the Value of Money ? 325 
Part III. Efforts to Secure a Money of Uniform 

Value, 330 

Chapter IX. Substitutes for Money, 33» 



BOOK V. 

EXCHANGE. 
CHAPTER I. 

HOW EXCHANGES SATISFY WANTS. 

Extended division of labor is possible only by- 
means of Exchange. Where one man devotes him- 
self to one thing he produces a great deal more of it 
than his family can use, and he lacks the thousand 
other things they need. Each one exchanges his per- 
sonal service, or the goods he produces, for other 
things which he desires. Exchange makes possible a 
division of labor, not only between individuals, but 
also between nations. 

The cost of Exchange is sometimes greater than the 
cost of production ; that is, it frequently costs more to 
sell goods than to make them. The problem is not 
merely one of transportation. When people want tea, 
grown in China, the carriage of goods half round the 
globe is the simplest part of it. The shipload must 
be distributed among wholesale merchants, and again 
among retail merchants, who sell it to the customer in 
single pounds. The merchants must keep on hand a 
stock of such varieties as may be desired j and the la- 
18 ( 271 ) 



272 EXCHANGE. 

bor of transporting, testing, sorting and distributing 
is very considerable, to say nothing of the capital em- 
ployed, and risk involved. A part of this work re- 
quires the highest form of skilled labor, which com- 
mands the highest price in the market. 

Two people can seldom meet, and exchange their 
products directly ; when they do, the seller sometimes 
finds more labor connected with the selling of his prod- 
uct than with its production. The milkman would 
perhaps be glad to sell milk to one purchaser at his 
farm for two cents a quart ; he brings it to the city, 
takes it from place to place, and gets eight cents a 
quart. Three-fourths of the price is therefore pay- 
ment for the transportation and exchange, and only 
one-fourth for the milk. The labor and cost of sell- 
ing the milk is three times as great as the labor and 
cost of its production. Of the eight cents a quart, 
only one-fourth belongs to production, while three- 
fourths belong to exchange. If the producer sells the 
milk at his farm for two cents a quart, to a merchant 
who intends to sell to consumers at eight cents, we 
have precisely the same division of the returns as be- 
fore — one-fourth for Production, and three-fourths for 
Exchange. 

These examples are simple wants ; more frequently 
one does not know what he will need, nor have the 
means to purchase, beforehand. The merchant looks 
the world over, and sees what people are producing. 
He finds what the people want, in every nation and 
hamlet and farmhouse. He purchases goods, and car- 
ries them to the people who will give the most for 



HOW EXCHANGES SATISFY WANTS. 273 

them. He thus encourages the production of some 
goods and discourages the production of others, ac- 
cording as human wants fluctuate. The capital re- 
quired for the world's exchange is as great as the 
world's production. The number of men employed is 
less, but the risk of loss is greater. Goods are in- 
jured, or depreciate in utility. The merchant finds 
himself mistaken in his opinion of what the people 
want, and must dispose of some goods at a loss. 

It has been common to call it all Production, and to 
say that the merchant vessel trading with China, the 
railroad superintendent and the retail merchant are 
all engaged in Production, since it is just as important 
that goods be exchanged as that they be produced. 
But Exchange is not Production, and it confuses our 
ideas to call it so. To the interests engaged in Pro- 
duction belong all the goods they produce ; but if they 
exchange them themselves they must employ more la- 
bor. If one man takes the entire product of a factory, 
he can not give all he expects to sell it for. One has 
a right to what he has produced ; he sells it on the 
best terms he can for money to buy other goods, 
because he prefers exchanging to keeping. 

If it be asked, " Since exchanges cost so much, why 
are they made ? Why does not every one produce all 
he wants himself?" the answer is, first, it would be 
impossible ; and second, the gain from the Division of 
Labor is many times the cost of exchange. Few peo- 
ple stop to think of the great part which Exchange 
plays in the satisfaction of wants, and how much bet- 
ter they can be satisfied by its aid than without. It 



274 EXCHANGE. 

transfers articles from one to whom they have little 
Value in Use to one to whom they have a higher 
value ; it makes possible the Division of Labor. 
Without Exchange, only a small fraction of the pres- 
ent population could be sustained, and the wants of 
these few would be meagerly supplied. We assume 
its existence, like that of the air about us ; and all 
production, and all efforts for the satisfaction of wants, 
are made on the assumption that exchanges are to con- 
tinue. 



CHAPTER II. 

THE PRICE OF A DOLLAR. 

Our first object is to ascertain how much of one 
commodity will be given for a certain quantity of an- 
other. How much for how much? It is more im- 
portant that one know this beforehand than that he 
make a good bargain when it comes to a trade. Under 
the division of labor every man produces more of some 
one thing than he can use himself, and the excess is 
worth to him only what he can get for it. But he be- 
lieves he can get about so much, and produces his 
goods with this expectation, perhaps employing labor 
for wages and incurring other expenses. If he does not 
get about as much as he expected, it means financial 
ruin. Most failures in production come from miscal- 
culation as to what the product can be sold for. A 
year is required to raise a crop on a farm, a longer 
period for some other forms of j)roduction; and one 
must know what he can get for goods, often a year or 
more in advance. Nothing will enable us to predict 
this with certainty; yet when the conditions are 
fairly well known, we may be able to determine with- 
in certain limits what the terms of exchange will be. 

Optimists sometimes say that every exchange is 
beneficial to both parties, else it would not be made. 
Yes ; under the circumstances. Anything one can not 
use is worth nothing to him unless he can exchange it 

(275) 



276 EXCHANGE. 

for something he can use. If the farmer can never 
get more than five cents a pound for the wool he pro- 
duced last year, he would better sell it. However, if he 
had known that the price of wool would be so low, he 
would not have raised the sheep. He produced the 
wool because he had reason to believe that he could 
exchange it for a larger part of the world's products. 
A successful manipulator of the market can gather to 
himself a large part of the value of the world's pro- 
duction, by leading men to suppose they can obtain a 
certain price for an article, and then so changing the 
conditions that they can not get half that price. 
Under the circumstances, it is better for one to 
give up his money to a robber. One never makes 
an exchange in which he does not believe that he is 
benefited, under the circumstances, but it is unfor- 
tunate that he did not know what the circumstances 
would be before he began the production of the goods. 
It is only in the out-of-the-way lines of production, 
and under special circumstances, that individuals are 
able to influence prices, for more than a few days. In 
the ordinary channels of trade, and in the common lines 
of production, the terms of exchange are fixed by great 
natural laws, easily understood. If the producer does 
not get as much as he expected, it is because he has 
produced the wrong thing ; because production has not 
gone forward in the way which is most advantageous 
for the satisfaction of the world's wants. Neverthe- 
less, it is just as important that the producer under- 
stand the laws of Exchange, and the principles which 
govern the terms on which exchanges take place. Theses 



THE PRICE OP A DOLLAR. 277 

principles are equally important where human effort 
satisfies wants directly, and in exchange of the title to 
any Resources of Nature. 

Exchange Value. — The quantity of goods, or the 
service, which one will ordinarily receive for an article, 
is called its Exchange Value. When one receives 
money, the sum is called price. Professor Price, of 
England, called the goods which the money buys, the 
price of the money ; and when lecturing in the United 
States, nearly twenty years ago, used to ask the ques- 
tion : "If hats are selling for four dollars apiece, what 
is the price of a dollar ? " Of course the answer always 
came promptly : " One-fourth of a hat." We have 
been accustomed to say " value of a dollar," rather than 
" price," meaning the same thing ; but there are some 
advantages in extending the term " price " to both 
sides of the money transaction. The word " value " is 
never quite as clear as "price," because we have a 
value in use as well as in exchange ; and only the 
clearest thinker keeps them strictly separate. The 
term " price " is definite ; and the moment we get 
used to the strange sound of " the price of a dollar," 
we know exactly what it means, and the idea can not 
be confused with anything else. 

It is evident that there are as many prices of a dol- 
lar as there are goods or services which it will pur- 
chase. If the price of a dollar is one-fourth of a hat,, 
it is also one bushel of wheat, twenty pounds of iron,, 
two yards of cloth, twenty pounds of sugar, and so on 
through the list of everything which money will buy. 

Sale and purchase are much simpler than barter. 



278 EXCHANGE. 

At first it would seem that they require two transac- 
tions instead of one ; we sell the goods for money, 
and buy other things with the money, instead of trad- 
ing goods directly for goods. But we seldom wish to 
make such direct trades. The producer wishes to dis- 
pose of all his product, and to get a great variety of 
goods in exchange for it. We want a little of a great 
many things ; and if we attempted to estimate the 
value of every article in terms of every other article, 
the task would be endless. It is a great deal easier 
to refer each to a common unit. It would be impos- 
sible to string a wire from the house of every tele- 
phone subscriber to that of every other subscriber. 
To thus connect a hundred subscribers would require 
4,950 wires ; but by running all the wires to a central 
office, a hundred are sufficient. Every message goes 
to the center, and out from the center. There are 
more than a thousand classes of goods to exchange. 
To estimate the value of each one of the thousand 
in that of all the others, would require 499,500 cal- 
culations ; by means of money it requires only a 
thousand. So, in seeking for the terms on which ex- 
change will take place — how much for how much — to 
save the endless combinations we go to a central piece 
of money, and from that to every article which is 
desired in exchange. Take the product of a shoe 
factory. How much can the owners get for it in the 
things they want ? First, how much money .can they 
get for the shoes ? This is only half the answer, for 
they can not eat the money. Second, what are the 
prices of a dollar? How much will a dollar buy? 



THE PRICE OF A DOLLAR. 279 

How much flour ? how much clothing ? how many 
school books? and so on, to the end of hundreds of 
questions. When we know the price of the product 
of the shoe factory, and the prices of a dollar, we 
can tell how much the producers will receive. We 
must know how many dollars they can get for what 
they have to sell, and what they can buy with a dollar. 
In endeavoring to ascertain the terms on which ex- 
changes will take place — how much will be given for 
how much — we shall assume the exchanges to be made 
by means of money, because it is so much simpler than 
barter. Frequently we shall notice only the price of 
the goods — how much money one can get for an 
article ; but we must always remember that the price 
of a dollar is equally important — that is, the quantity 
of goods one can get for the dollar. 



CHAPTER III. 

EXCHANGE VALUES. 

An Exchange Value of any article is what one can 
get for it in the open market. It must be carefully- 
distinguished from Value in Use. Value in Use is 
what a thing is worth to use ; Value in Exchange is 
what it is worth to sell. The two have some relation, 
but are often far apart. In fact, Exchange Value is 
likely to lie between the different Values in Use to 
different persons. An elephant would have no Value 
in Use to most people. His Exchange Value is what 
a showman or park commissioner would give for hhn. 
It is sometimes said that a thing is worth only what it 
will sell for. If by this we mean its Exchange Value 
is what it will sell for, we are only stating the same 
thing in different language ; but if we mean that its 
Value in Use is only what it will sell for, the state- 
ment is wholly untrue. Value in Use may be a great 
deal more, or a great deal less, than the Value in Ex- 
change. As has been said before, the first object of 
this book is to find the terms on which exchanges will 
be made. Exchange Value is only a shorter name for 
" the terms on which exchange will be made." We 
are to rid ourselves of all ideas as to whether ex- 
changes are rightfully or wrongfully made, and of all 
extraneous circumstances, and remember that Ex- 
change Value is independent of all moral qualities. 

(280) 



EXCHANGE VALUES. 281 

It is simply what the article can be exchanged for, in 
the market. 

There will he as many Exchange Values as there 
are articles for which a commodity can be exchanged. 
A country shoemaker may be able to trade a pair of 
boots for a cord of wood, four bushels of wheat, one- 
half ton of hay, or for certain quantities of various 
other commodities. The Exchange Values of the boots 
are the cord of wood, four bushels of wheat, half a 
ton of hay, or whatever quantity of any other article 
the shoemaker can get for his goods. It would be 
easy to compute the Exchange Values of a bushel of 
wheat in a thousand articles, so that it will have a 
thousand different Exchange Values. 

Price is the Exchange Value of anything in money, 
and is therefore simply one of the numerous Exchange 
Values which every article has. For convenience it is 
usually the only one taken account of. When we say, 
" the value of an article," we usually think of its value 
in money, which is its price. The real values, how- 
ever, to the seller are the values estimated in the goods 
which he wishes to purchase. The farmer has his 
wheat crop and desires to use it to purchase goods for 
himself and family. What he really wants is these 
goods — groceries, dry goods, clothing, musical instru- 
ments, farm machinery, and many other things. In- 
stead of estimating the value of his wheat in these 
goods, he is anxious about the price, or the value in 
money. He is likely to forget the values, or the 
prices, of a dollar, and thinks he gets a high or low 
value for his wheat according as the price is high or 



282 EXCHANGE. 

low. An economist looks beyond this. He sees the 
values of a dollar, and estimates the quantities of the 
goods which the farmer can get in exchange for his 
wheat crop. If these are more this year than last, the 
values of his wheat are higher. t 

The same is true of labor. Many men have noth- 
ing to sell but their labor power. What they really 
want in exchange for labor is their house rent, food 
and clothing for themselves and family, and numerous 
comforts and luxuries of life. The laborer exchanges 
his labor for money, and the money received is the 
money value, or price, of his labor. But this is only 
half the exchange. He now has to buy goods with 
the money, and the values of the money in the thou- 
sand different articles he wants — that is, the thousand 
different prices of a dollar — are what he wants to 
know. *The only way to ascertain whether the real 
values of a commodity have risen or fallen is to make a 
computation of the quantities of different goods which 
it will buy, in the proportion in which the purchaser 
desires to get them. It is seldom that the value of 
any article continues the same for any length of time, 
but it is easy to estimate how much of, say, a hundred 
staple articles, a bushel of wheat will buy ; and to 
compare these quantities with what it would have 
bought one, two, three, or four years ago. We thus 
ascertain whether the value of wheat has risen or 
fallen. The simplest way to make a computation is 
to take the prices of each of the articles, at the dif- 
ferent dates, then to ascertain how much of each the 
price of a bushel of wheat would buy on each day 



EXCHANGE VALUES. 283 

specified. We can thus ascertain whether the bushel 
of wheat has risen or fallen in values, as estimated in 
the goods which the farmer wishes to purchase. 

It is in this way that we can ascertain the changes 
in the values of money. The average value of money 
is very different to different people, depending on what 
they wish to buy. The common laborer, whose wages 
will not be much more than a dollar per day in a town 
of moderate size, will be somewhat limited in the range 
of his purchases. After paying house rent, purchas- 
ing food and clothing for himself and family, school 
books for his children, etc., there will not be much 
left for a wide range of luxuries. The values of the 
dollar to him must be estimated in the things which 
he is likely to purchase. A man with an income of 
five thousand dollars per year will be apt to purchase 
a greater variety of goods ; and his values of a dollar 
will be estimated in a somewhat different and greater 
variety of objects. The values of a dollar can be got 
at only by a somewhat general average of wants of 
the whole people ; and we come nearest to the true 
average value of a dollar by selecting a considerable 
number, at least a hundred, staple commodities in 
general use ; and taking them in the proportions in 
which they are called for in the markets of the nation. 
By selecting a hundred such articles, and taking a 
proper proportion of each, we are enabled to say 
whether the average value of a dollar is greater or 
less this year than last, and to what extent it has 
changed. Such estimates always show very consider- 
able variation in the values of money, which is far 



1284 EXCHANGE. 

from being the unvarying standard that is popularly 
supposed. 

One should become accustomed to estimating the 
value of his labor, and of the commodity he has to 
sell, in all the objects which he proposes to buy — not 
in money alone, but in the articles for which he wishes 
finally to exchange it. 

It is to be understood that Exchange Values are not 
the cost of the production ; are not the labor involved in 
production ; are nothing hut the things which one can 
get in exchange for what he has to sell. The cost of 
production, or the labor involved, is often the cause of 
value, and sometimes determines what the value will 
be, as we shall see hereafter. But it is not the value, 
which may depend upon a combination of many causes. 

Exchange Value, as we shall see hereafter, has also 
a relation to Value in Use, but it is not Value in Use, 
and when we are estimating or thinking of Exchange 
Value we are to think simply of the price of an 
article in money, or of the goods that can be had for 
it in trade. This much is necessary to fix the idea of 
Exchange Value in our minds before proceeding to in- 
quire what determines it, or what determines the terms 
on which one article will be exchanged for others. 

The reader is urged not to leave this chapter with- 
out a clear idea that it is not value, but values, that 
we are seeking to ascertain. One value of an article 
may be of little consequence. It has a thousand 
values, and each one wishes to know the values in the 
goods he expects finally to get. The advantage of 
knowing the money value is in the facility with which 
all other values are deduced from it. 



CHAPTER IV. 

T?HE LIMITS OF VALUES IN EXCHANGE AEE FIXED 
BY VALUES IN USE. 

We now come to the question, On what terms will 
exchange be made ? How much of one article will be 
given for another ? The popular statement that every 
exchange is an advantage to the parties, is true if we 
add " under the circumstances in which it is made "; 
that is, no man will make a trade unless he thinks it 
best for him to make it, as he is situated, although 
the other party may be responsible for the situation. 
This simply means that one will not give more or 
take any less for any article than what he supposes to 
be its Value in Use to himself. But the Value in Use 
is very different to different individuals. The Value 
in Use of the elephant to its owner may be nothing. 
He has no use for him; he can not afford to feed him ; 
he would better give him away than keep him. Conse- 
quently, if he gets one dollar in exchange for him, he 
has gained the dollar. On the other hand, the Value 
in Use to the showman may be several thousand dol- 
lars. He will not give more than this. If he gets 
him for less, he gains so much. 

Let us suppose the Value in Use of the elephant to 
the showman to be one thousand dollars ; to the owner, 
nothing. The margin here is one thousand dollars, 
which will be gained by one party in the trade, or di- 

(285) 



286 EXCHANGE. 

vided between both. The limits of the exchange are 
therefore the Value in Use to the owner and the Value 
in Use to the showman. We have not stopped to in- 
quire how the owner got the elephant. He may have 
imported him at a cost of nine hundred dollars, under 
the belief that he could sell him to the showman for 
one thousand dollars. If he can not get the nine 
hundred, of course he meets with a loss. But the loss 
has already been incurred. The labor and the capital 
have been sunk, and the elephant is worth nothing to 
him unless he can sell him. If he has only one show- 
man to deal with, he may be compelled to take much 
less than the beast cost him. On the other hand, if 
there is no other elephant for sale, and the owner be 
firm, he may compel the showman to pay his full Value 
in Use, or one thousand dollars. If there are only 
two parties to this transaction, — no other elephant in 
in the market, no other showman desiring to pur- 
chase — one can not predict the price beforehand, ex- 
cept to say that it will be between nothing and one 
thousand dollars. It will depend partly on the firm- 
ness of each, or the knowledge which each has of the 
other's condition, and upon mental traits and accidents 
which would not be the same with any two parties. 

Let us fix, then, in our minds ; first, this principle, 
that all exchanges are limited by the Value in Use 
to each party ; but the limits are often far apart, and 
may mean wealth or poverty to either party. Often 
there is an element of justice, and one can say that 
the price ought to be so and so, but this will not de- 
termine what the price will be. 



LIMITS OF VALUES. 287 

Competition. — Let us suppose there are two show- 
men and one elephant. It is not likely that its Value 
in Use will be the same to both. It will, perhaps, be 
a thousand dollars to one showman and fifteen hun- 
dred to the other. Now, how much will the elephant 
bring? If these men compete for him, at least one 
thousand dollars, since either would prefer giving that 
to losing him. The first bidder will give the thousand 
rather than to have the other get the animal ; and the 
second will give a little more than a thousand because 
the Value in Use to him is fifteen hundred. If the 
full circumstances of the case are known, the owner 
will get one thousand dollars, or a trifle above that. 
The second purchaser will not give much more than 
one thousand, because he knows his competitor can not 
afford to give more, and that the elephant is worth 
nothing to its owner. If, however, competition is not 
open ; if the seller can keep the second purchaser in 
ignorance of the condition of the first, and lead him to 
believe that the first purchaser would give fifteen hun- 
dred, he can obtain something near that price, because 
the second is willing to give that, if he can not get 
the beast for less. Open competition, where all cir- 
cumstances are known, simply narrows the limits of 
Exchange Value. In the first case, we saw that the 
price would be somewhere between nothing and a, 
thousand dollars ; in the second case, it will be either 
one thousand or somewhere between one thousand audi 
fifteen hundred. 

Let us now suppose other purchasers to whom the 
elephant is worth eleven hundred, twelve hundred, 
19 



EXCHANGE. 

thirteen hundred, and fourteen hundred, respectively. 
The owner will now obtain something between four- 
teen and fifteen hundred dollars for him. He is 
worth fifteen hundred to one showman and fourteen 
hundred to another. Competition frequently brings 
the limits of exchange within a few cents of each 
other. 

Combination. — Combination destroys competition. 
Let us suppose now that all these showmen combine. 
They say, " There is only one elephant to be had. He 
is worth nothing to the owner, and there is no need 
of giving more than a hundred dollars for him. If, 
therefore, we agree that one of our number shall offer 
one hundred dollars, and the others shall refuse to 
purchase, or offer less than one hundred, the owner 
will sell at that price, because he will be a hundred 
dollars better off than to have the animal left on his 
liands ; and we can arrange the gain by dividing it 
;among ourselves." This is combination of many par- 
ties against one. Competition is often defeated by 
combination. 

Under either competition or combination, Exchange 
Value depends on Value in Use. The price can not 
be less than the Value in Use to the seller, or more 
than that value to the buyer. If he buys to sell 
again, he will not pay more than the Value in Use to 
the final purchaser. Values in Use, therefore, fix the 
limits of Values in Exchange. 



CHAPTER V. 

SUPPLY AND DEMAND. 

In the last example, we considered the case of but a 
single animal, although there were several purchasers. 
Now let us suppose a large number of animals for sale. 
And we shall not be far out of the way if we assume 
that in a county in Illinois there are a number of 
horses awaiting the visit of a dealer. The Values in 
Use of the horses in this county are very different, 
according to the circumstances of the owner. Some 
farmers with a single team could not afford to part 
with it for a thousand dollars, unless another could be 
purchased. As they are situated, with their farm and 
other work, the Value in Use is far greater than this. 
There are other horses, equally good, for which the 
owners have no use, which they are feeding in idle- 
ness. It would be better for the owners to give them 
away, if it were certain that they could not be sold at 
any price within a reasonable time. The habit, how- 
ever, of considering a horse worth about so much, and 
the hope of future sale, and possibly of future use, 
make the owner unwilling to part with him except 
for some fair proportion of what he thinks he ought to 
get. We may assume that in this entire county there 
will be a few average horses for which the owners 
would take $75.00, each, if they knew that they could 
get no more. The total supply of horses in this 

(289) 



290 EXCHANGE. 

county is all the horses there are ; but the Value in 
Use of some of these is so high that they must be left 
out of the account. Let us assume that there are a. 
hundred average horses for which the owners would 
take $150.00, each, if they could get no more. While 
the total supply is all the horses there are, the supply 
at $150.00 is one hundred horses. 

Demand is desire for any commodity. The total 
demand is the total desire, or all that would be taken 
by all the people if the price were nothing. The total 
demand for drinking-water is measured by the amount 
that is used. For practical purposes we usually have 
to deal with more limited demands, at fixed prices.. 
The total demand for horses in this county is the 
number of the horses desired. But there are demands 
for less numbers at various prices. At $75.00 each, 
perhaps one thousand horses could be sold. At 
$150.00 each, not more than ten ; hence the de- 
mand at $75.00 is for one thousand horses, the de- 
mand at $150.00 is for only ten. 

We now have the full conditions of Supply and De- 
mand, and assume that we are acting under free com- 
petition. The horses for sale constitute Supplies at 
various prices. The purchasers embody Demands at 
various prices. How many horses will change hands, 
and at what price or prices ? 

We notice, first, that assuming competition to be 
free, in an open market where each knows what the 
other pays and receives, horses of the same grade will 
all sell at the same price. It is true there may be a 
few men who would sell at $75.00 rather than not sell 



SUPPLY AND DEMAND. 291 

at all. But they are not numerous enough to supply 
the demand, and competition among the purchasers 
will enable them to secure a higher price. So, while 
-there are a few men who would pay $150.00 rather 
than not buy, the supply of horses at a lower price 
ds so much greater that competition will enable the 
buyers to purchase cheaper. Each buyer will pur- 
chase where he can buy cheapest. Each seller will sell 
where he can get most. The final result will therefore 
be to secure the same price for all. What will that 
price be, and what will be the number sold ? 

We have supposed ten horses of which the Value in 
Use to the owners is but $75.00, which will therefore 
lae sold at that price if they can not get more ; and 
there are purchasers who will pay $150.00, each, for 
ten horses if they can not get them for less. Now, 
clearly, there must be at least ten horses sold, and the 
price will be somewhere between $75.00 and $150.00. 

But there are other purchasers, and other sellers. 
While only ten horses would be taken at $150.00, 
twenty would be taken at $140.00. Let us suppose 
also that while there are but ten horses for sale at 
■$75.00 there are twenty for sale at $90.00, hence at 
least twenty horses will change hands, and the price 
will be between $90.00 and $140.00. As the price is 
reduced, the number of purchasers increases. At 
$130.00, thirty horses would be taken. Perhaps 
thirty horses are for sale at $100.00, so at least thirty 
horses will change hands, and the price will be be- 
tween $100.00 and $130.00. At $120.00 there is a 
demand for forty horses. Forty horses can be had 



292 EXCHANGE. 

for $110.00, consequently at least that number 
will change hands at a price between 1110.00 and 
$120.00. At $110.00 there is a demand for fifty 
horses, but while forty horses could be had at $110.00, 
fifty can not be had at less than $120.00, seeing the 
owners of the last ten find them worth more than 
this to use. Now, fifty horses can not change hands, 
because the demand for this number is at $110.00, 
whereas the supply is at $120.00, hence the number 
sold must be less than fifty ; and, as we have seen, 
greater than forty; the number of horses that will 
change hands will be between forty and fifty, and the 
price somewhere between $110.00 and $120.00. 

This somewhat lengthy supposition has been written 
out to familiarize ourselves with supplies and demands 
at various prices, and to see how both the selling price 
and the quantity sold are finally arrived at by the play 
of the forces of competition. There is not one, but 
many, Demands, and not one, but many, Supplies. 
We can not tell what the demand is until we know 
the price at which the exchange is proposed. We can 
not tell what the supply will be until we know the price 
offered for the goods. 

The Total Demand for any article is commensurate 
with human wants. It means all that would be used, 
or taken as a gift. The Total Supply is all there is 
of the commodity — all the wheat in existence ; all the 
horses fit for use. The Total Supply of any article 
is simply the quantity of it which exists. 

The Demand at any particular price is the quantity 
which would be taken at that price. It can not be 



SUPPLY AND DEMAND. 293 

greater than human wants, and depends as much on 
what people have to buy with as on the wants them- 
selves. A starving man can not buy a loaf of bread 
for five cents, if he have not the five cents. The 
Total Demand for grain is all that people could use. 
The Total Demand at a dollar a bushel is all that is 
wanted at that price by people who have the means to 
purchase it. So there are various Supplies at every 
possible price. While the Total Supply is all there 
is, the Value in Use to some owners is so great that 
they could scarcely be induced to sell. The supply 
of wheat at even ten dollars per bushel would prob- 
ably be found to be less than the total supply. That 
is, even ten dollars per bushel would not call out 
all the wheat in the world, although one dollar per 
bushel might purchase half of it. What is called the 
Visible Supply of an article often means no more than 
that portion which is offered for sale at a price slightly 
above the ruling market rate, and means the supply 
within possible trade limits. The reader can not too 
carefully distinguish between the different supplies at 
various prices, as well as between the different de- 
mands at various prices. The market rate at which ' 
exchanges will actually take place is that price at 
which demand and supply are equal. When wheat is 
selling for ninety cents it means that the supply at 
ninety cents is the same number of bushels as the de- 
mand at ninety cents. The supply of wheat at one 
dollar would be larger than the demand. The de- 
mand at eighty cents would be larger than the supply, 
but it so happens that the amount demanded and the 



294 EXCHANGE. 

supply at ninety cents are equal ; and hence this is 
the rate of exchange. As the demands and the sup- 
plies change, so the market rate changes. 

While an increased demand will unsettle the mar- 
ket and require a higher price, no one can tell how 
much higher. An increased supply will lower the 
market rate ; but no one can tell how much it will 
lower it, because no one knows precisely what the de- 
mands at lower rates are, or what are the supplies at 
higher rates. Nothing but a practical understanding 
of the demands and supplies of each article, learned 
in practical business, will make an accurate judge in 
each case. 

Supply and Demand limit prices even when there is 
no competition, provided that all articles of the same 
grade are sold at the same price. Suppose all the 
wheat of the United States to be in the hands of a 
combination, so that there is no competition between 
the sellers. The price will depend on the number of 
bushels of wheat in existence. There are some per- 
sons who would pay $100.00 a bushel rather than not 
have it, but they would take only a limited quantity. 
There is more than can be consumed in the United 
States, and for the purpose of export one can afford 
to pay only ninety cents. Hence, if all the wheat is 
sold at the same price, it must all be sold at ninety 
cents. The owner sometimes finds it profitable to de- 
stroy half the supply because he can get more for the 
other half ; or, what is the same thing, to leave half 
unsold. In manufacturing, he may close half the fac- 
tories, throw men out of employment, and stop pro- 



SUPPLY AND DEMAND. 295 

"duction. There are demands for a certain quantity of 
the goods at high prices. By destroying a portion, 
or limiting production, he is able to get high prices 
for the quantities sold ; and a high price for half may 
give more profit than a low price for the whole. 
While some 'persons would pay $100.00 a bushel for 
wheat rather than do without it, there are others who 
will substitute something in its place, if it cost more 
■than ninety cents. So that the requirement to sell the 
whole quantity at a uniform price produces the same 
effect as competition. This is the object of many 
government regulations. In railroad business it is 
now provided by law that all goods of the same class 
shall be carried for all shippers at the same price. 
Although the rate may be left to the railroad to fix, 
and although there are many shippers who would pay 
several times the regular rates if they could not ship 
for less, more business, and more income, can be got 
at the rates fixed than at higher ones. The law is 
evaded, but if the principles could be enforced, and 
the railroads compelled to perform proportional ser- 
vices at uniform prices for all parties, nearly all the 
benefits of competition would be secured, even though 
there were but one line between two points. 



CHAPTER VI. 

COST OF PRODUCTION. 

We have seen that Exchange Value, the terms on 
which exchanges are made, is limited by Value in Use 
and must be between the lowest and the highest values 
to the parties to the trade. The limits are very wide. 
If it were possible for a merchant to buy at the lowest 
Value in Use and to sell at the highest, he would soon 
have a large portion of the wealth of the earth under 
his control. Under many circumstances, an article is 
worth nothing to the seller, and worth a great deal 
more to the purchaser that he ought to pay. 

We have seen that Value in Use is brought within 
narrower limits by competition, and is usually fixed 
by Supply and Demand, particularly when demand is 
made up of many competitors under the condition of 
free competition. 

The next question is, What determines Supply and 
Demand? We have seen that there are numerous 
Supplies of most articles, each at a different price ; 
and what we call Demand is made up of many De- 
mands at different prices. Now, what fixes these Sup- 
plies and Demands? 

Where articles are produced regularly, the supply, 
and consequently the price, usually depends upon the 
Cost of Production. By the cost of production we 
always mean, not what it has cost to produce a given 

(296) 



COST OF PRODUCTION. 297 

article, but what it will cost to produce another like 
it. It is true that labor and capital invested in the 
production is sunk, and that the price of the article is 
fixed by the present Supply ; but there will be a fu- 
ture Demand ; and if the goods can not be sold this 
year, they may be retained for sale next year, and thus 
come into competition with future productions. The 
goods of this year can not be sold next year for more 
than it will cost to produce others like them, but, if 
they do not deteriorate in utility, they will be worth as 
much as new goods ; hence the holder will decline to 
part with them for much less than the cost of produc- 
tion of others like them ; and at a lower price will 
withdraw his supply from the market. In fact, 
though the total supply may be great, the supply of- 
fered will all be at the cost of producing other goods 
like the present, less interest, risk, etc. Hence the 
price at which a supply will come on the market will 
not be much less than the cost of future production. 
If the present demand exceeds the supply, this price 
will be higher. 

We may look at the matter with advantage in 
another way. Most goods are produced to sell. The 
manufacturer knows they will be of no use to him. 

He makes them because he believes that there will 

■ 

be a demand at a certain price. If there are indica- 
tions that there will not be a demand at this price, he 
will not produce the goods. Now, we have seen that 
there are demands at various prices. There is a de- 
mand for cotton cloth at twenty-five cents a yard, 
since a large quantity could be sold at that price if it 



298 EXCHANGE. 

could not be had cheaper. There is a larger demand 
at ten cents ; a larger demand at five cents ; a larger 
demand at two cents. If the manufacturer under- 
stands the state of trade, he will not produce goods 
enough to satisfy the demand at two cents per yard, 
hut he will endeavor to satisfy all demands above the 
cost of production. If he believes that the supply 
will be so large as to bring the price below the cost 
of production, he will shut up his mills. If there is 
reason to expect that the price will be greatly above 
the cost of production, he will work his mills to the 
utmost capacity; and perhaps double the production 
of goods. Competition among producers and pui*- 
chasers, therefore, tends to limit the supply to the 
demand at the cost of production ; and we may lay 
down as a general principle that, where goods are pro- 
duced regularly, and the production can be increased 
or decreased without great loss, the price or exchange 
value will tend to be that of the cost of production. 
It may never settle into this exact price, but it will 
hover about it. 

There has been considerable discussion as to what 
constitutes the cost of production. For practical pur- 
poses under the wages system it is the cost to the pro- 
ducer. It is the wages he pays out, and the interest 
on the capital he invests, as well as the rent of the 
land he occupies. 

Strictly speaking, the interest should be computed 
only on what might be called free capital ; that is, the 
sum necessary for the support of the laborers, pur- 
chase of material, and general capital which he could 



COST OF PRODUCTION. 299 

turn in some other direction. The cost of production 
does not strictly imply interest on Permanent Pro- 
duced Wealth, since machinery can be used for no 
other purpose, and it may as well be used as to stand 
idle. Unrestricted competition, therefore, tends to re- 
duce the price to the cost of production, leaving the 
owner of fixed capital nothing for its use. This is best 
seen in the case of railroads. Suppose there are two 
railroads between two points, and they compete freely 
for business. Since it is better to carry freight for 
the cost of handling than not to carry it, if there is 
no agreement or understanding between the roads, 
unrestricted and complete competition will reduce the 
rate of freight to a point that leaves nothing for in- 
terest on the enormous capital sunk in the construc- 
tion of the road, and represented either by stock or 
debts. Competition even tends to reduce rates to a 
point which leaves nothing for the salary of the gen- 
eral manager, because in each particular instance it is 
better for the road to accept a rate which covers the 
cost of carriage than to lose the business. 

Here is the weakness of competition. It is well 
enough where little fixed capital is required ; but it is 
impossible to carry on great business enterprises, rail- 
roads, steamships, factories, or anything which re- 
quires vast sums of fixed capital, on the principle of 
unrestricted competition. The competition must be 
checked hi some way, either by agreement, mutual un- 
derstanding, or common opinion, in order to secure in- 
terest on the fixed capital invested. 

Practically, however, most business managers refuse; 



300 EXCHANGE. 

to compete except on terms which will allow interest 
on fixed capital. There are frequent instances of 
railroad wars, when, for a short time, goods may be 
carried at less than the cost of transportation ; and 
even retail merchants have been known, on account of 
rivalry, to sell at less than the cost of the goods. But 
it is well understood that this sort of thing can not 
continue. Railroad wars always come to an end. 
Most business managers prefer to lose, rather than 
make a price which will not allow something for in- 
terest. They recognize that to do otherwise is sui- 
cidal. 

Where there is no competition, as in the case of a 
single railway between two points, excess of supply 
will never carry the price below the cost of carriage 
plus the interest on fixed capital. Less business at a 
higher price would be more profitable. When such a 
road does make a price at the actual cost of carriage, 
allowing nothing for interest on capital, it is only to 
particular persons or for particular classes of goods, 
with the hope of making its profit from other custom- 
ers or on different classes of goods. In this case it 
does not intend to charge all persons the same price 
for the same service, or proportional prices for pro- 
portional services. ^ 

As a general rule, therefore, we may say that all 
prices, under competition, tend to fall to the money 
cost of production, though this may include interest 
on capital invested." When they go lower than this, 
production must be diminished or goods produced 
cheaper by the lowering of wages, or otherwise. 



COST OF PKODUCTION. 301 

It is wholesale prices that are here spoken of, be- 
cause, in regard to them, both buyer and seller are 
better informed as to the quality of the goods and the 
extent of the demand and supply. In retail prices, 
there is room for considerable margin, through the 
ignorance of the purchaser as to the quality and the 
cost of production of the goods. If the seller has 
the reputation of being trustworthy, so that the cus- 
tomer feels sure he is getting goods that are just what 
he supposes, he will pay a considerable profit rather 
than go where he can not be sure of the quality of 
what he buys. Even in retail prices, competition acts 
through supply and demand, but there is far more 
margin. It limits the range of prices, but not so 
closely ; so that the same quality of goods may sell for 
fifty per cent, more in one place than in another. 
Competition is not inactive, however, when it fixes 
such limits as these. The limits of Value in Use are 
very much wider. 

The application of the Cost of Production is con- 
fined mainly, though not entirely, to the Resources 
Produced by Human Industry. It, of course, has noth- 
ing to do with Natural Resources, which man does not 
produce, except in the few instances where they can be 
replaced by the efforts of human industry. 

The Cost of Production has much more influence on 
those goods that are produced and consumed year by 
year than on those which are of a more permanent 
nature. Permanent Produced Wealth, such as dwell- 
ings, lasts for many years or even centuries. If pro- 
duction ceases, the supply is not, therefore, very rapidly 



302 EXCHANGE. 

reduced. The same effect is caused, however, by ara 
increase of population, which demands an increase in. 
the supply. Suppose there were more dwellings in a, 
city than could be used. The price would naturally 
fall below the cost of production. Now, though pro- 
duction were entirely to cease, the supply would still 
be more than sufficient for a stationary population, un- 
til the buildings were destroyed by time ; and for more 
than a generation the price might rule below the cost 
of rebuilding. This has happened in some villages 
which have made no growth for years. If, however, 
population increases, the dwellings are soon insuffi- 
cient, not for the old, but for the increased population ; 
more must be built, and when the necessity for further 
production arises, the Exchange Value of all dwellings 
will be brought up to the cost of producing others as 
good. Thus the Exchange Value of Produced Wealth 
tends to the Cost of Production, in the long run. For- 
tunes may be made or lost while the pendulum is. 
swinging to one side or the other, through a period 
of months or years. It is to be remembered that by 
the Cost of Production we do not mean what an arti- 
cle cost when it was made — that is a matter of no con- 
sequence in determining Exchange Value — but what it 
is believed it will cost to make another as desirable. 
The fashions change ; a house built a few years ago is 
out of style. One can now be built for half the 
money, which, though not so good in some respects, 
is to most people as desirable as the old. The old is, 
therefore, worth what this new house would cost. In 
applying the Cost of Production to values, we con- 



COST OF PRODUCTION. 303 

sicler only what it will cost to make something which 
will satisfy wants as well as what we have. The cost 
may be less than half, or more than twice as much. 

Cost of Production to the Laborer.— The 
cost of production has thus far been considered with 
reference to a manufacturer who employs labor for 
wages. The wages are themselves fixed by Supply 
and Demand, but he has to take account only of what 
he pays, what the manufactured goods cost him. 

Where one produces goods by his own labor, as a 
country shoemaker, or the members of a co-operative 
factory, the cost of labor is the irksomeness of it. 
Under such a system there would still be a cost of 
production which the laborers would have to estimate 
in the disagreeableness of the labor. One would de- 
termine whether he were willing to expend labor 
enough in the future to replace the article for the 
price he is offered. If not, while he might be com- 
pelled to sell for what he could get, production on his 
part would cease. 

The cost of labor to the laborer is the Value in Use 
to him of leisure, and increases with the number of 
hours and disagreeableness of the work. 

If all production were conducted by means of co- 
operation, and no wages were paid, the present wages 
question would be carried over into the price of the 
goods produced ; the price would depend upon the 
supply of various forms of labor, and the demand for 
various kinds of goods. Let us suppose the men of a 
co-operative shoe factory have produced a quantity of 
shoes which they place on the market. If they can 
20 



304 EXCHANGE. 

get no more than the material cost, they would better 
sell them, since their labor has been already expended 
and is lost. But if they believe they can get no more, 
they will cease producing shoes ; and the supply being 
diminished, the price will rise. These men will not 
willingly remain in idleness ; they will seek to pro- 
duce something which gives the greatest return to la- 
bor; and by their production they will increase the 
supply of something else, and hence diminish the 
price. 

The method by which labor is transferred from one 
product to another is seen in the case of the average 
farmer in the Northern States, who raises a variety 
of crops. One element of the cost of production to 
him, is his own labor, and the sacrifice of ease it in- 
volves. If the price of wheat rules low for a number 
of years, he turns his attention to the raising of wool 
or live stock. He may unconsciously estimate the cost 
of each product in the labor required to produce it. 
He does not raise some crops, because there is too 
much work about them ; though if the supply is so 
greatly reduced as to advance the price, farmers will be 
found to produce these very crops. The price of what 
these farmers raise will thus be governed by the cost 
of production to them, measured in their labor. The 
average price of the commodities which the farmers 
of a certain State produce will, therefore, be governed 
by the labor cost of producing them. This is, how- 
ever, only the relative cost as measured in the various 
commodities produced by the farmers of this State ; 
and has nothing: to do with the cost measured in the 



COST OF PRODUCTION. 305 

commodities produced in the distant factory, or in a 
State with an entirely different climate. The relative 
prices of wheat and wool and pork will depend on the 
labor cost of their production. 

If there were no friction, and men could freely go 
from one employment to another, the supply of the 
various productions of human industry would be con- 
trolled so as to be sold at prices which would give the 
same reward to all laborers of equal ability, in pro- 
portion to the disagreeableness of the labor. 

In practice the division can never be so simple. 
"We meet first what Professor Cairnes called " non- 
competing groups." Two men learn a trade ; the one 
is a printer, the other a carpenter. They may be of 
equal natural ability, but arrived at middle life neither 
can do the work of the other without years spent in 
learning a new trade, which can not be learned as well 
as in boyhood. Practically there is no competition 
between these men. Still less is there competition be- 
tween the watchmaker and the stone mason ; the law- 
yer and the civil engineer ; the teacher and the physi- 
cian. Only in common labor is the full force of com- 
petition felt, and here the cost of production to the 
laborer is estimated in the disagreeableness of the la- 
bor and the amount he can accomplish. Every group 
of laborers, however, competes within itself, and the 
reward within that group is likely to bear some pro- 
portion to the amount one is able to accomplish, or the 
quality of the work he does. In the professions the 
quality of the work may be so important a matter 
that many men have no competition, even in their own 
group. 



CHAPTEE VII. 

MONOPOLY. 

Monopolies are the result of natural advantages, or 
of legislation, or of the combination of competitors, 
and are by no means to be condemned indiscriminately. 

If a singer is without a rival, though he can not 
command his own price for singing, he controls the 
entire supply, and can get what the people consider 
the full Value in Use of his song. No monopoly will 
enable one to obtain more than this. 

Artificial Monojsolies are of two kinds : those granted 
by act of government, and enforced by its power ; and 
combinations of private parties who would naturally 
be competitors. Many privileges have been granted 
by governments to favorites in former times, as well 
as to private parties in return for some service to the 
government. Many of these have provoked great in- 
dignation. The present patent system of the United 
States is a monopoly for a term of years. The in- 
ventor is given the exclusive right of manufacture — 
not for the same reason that an author has the right 
to control the sale of his productions, but as an en- 
couragement to invention. 

The author and the inventor should never be con- 
fused. The principles on which copyright and patent- 
right are granted are as different as two things can be. 
The inventor who has bestowed time and capital in 

(306 ) 



MONOPOLY. 307 

Tbringing out his invention, is entitled to something for 
Tiis successful labor, put forth for the benefit of the 
whole people. As a rough measure of his reward, we 
give him a monopoly of his invention for a limited 
number of years, on the theory that perhaps no one 
else would have invented it within that time ; and 
that, in any case, this is a convenient method of re- 
warding him. Whether there could be a better method 
is a question of practical statesmanship. 

Effect of Monopoly on Price. — What price a 
Monopoly will obtain will depend, first, on whether 
it is compelled to sell to all persons at the same price, 
or is able to charge each one all he can afford to pay, 
regardless of the others. 

If compelled to sell at the same price to all, it can 
obtain only the Value in Use to the purchaser who 
can afford to pay the least. Let one have a monop- 
oly of the supply of flour for a city. There are people 
who would pay a hundred dollars a barrel, rather than 
do without it ; others would pay fifty, others ten dol- 
lars. As it will be impossible to sell his goods at 
different prices, the holder will fix the price at which 
his entire stock will bring the most money. If the 
price be a hundred dollars per barrel, only the wealthy 
can afford to take it. One will, perhaps, get more 
money by selling at ten dollars per barrel, and selling 
twenty times as much. In many cases he who has a 
monopoly can get more by deliberately destroying a 
part of his product. If he has all the flour that the 
city can use, he can get only the price for each barrel 
that the poorest can afford to pay. If he destroy half 



308 EXCHANGE. 

of his stock, the poorest of those able to consume it 
can pay a large price ; and his receipts for half may be, 
therefore, more than they would have been for the 
whole. Of course, suffering would be inflicted upon 
the people, and those who obtained flour would pay 
far more than otherwise, but we are considering Ex^ 
change Value. Exchange is heartless ; what control 
it should be subjected to is another question. 

Instead of destroying stock, Exchange Value can 
be as well maintained by limiting production. If the 
product can be limited, it will be sold at what it is 
worth to the lowest purchaser, and production can be 
limited until this value is above cost. The advan- 
tage of Monopoly consists in the power to obtain the 
full Value hi Use to the men to whom it is worth 
least. It may be very much above the Cost of Pro- 
duction, and very much above the price which would 
have been fixed by Competition. 

What Price will the Monopolist Fix ? — He 
can not fix a price above the Value in Use to the con- 
sumers. Within that limit, his price will depend on 
the quantity he can most profitably dispose of. When 
goods must be sold all at the same price, a very small 
profit on a large quantity may exceed a large profit on 
a small quantity. Suppose the Sugar Trust to have— 
what it can not have — an absolute monopoly. There 
exists a Value in Use, a demand, for a certain quan- 
tity at ten dollars a pound ; but it would be impossi- 
ble to wholesale sugar at two prices, and although the 
ten dollars a pound would be practically all profit, the 
total sum received might be less than a profit of half 



MONOPOLY. 309 

a cent a pound on the enormous demand at five cents. 
Those having an absolute monopoly of this kind care- 
fully estimate the various demands, with the quantity 
desired at various prices, and fix a price which gives 
the greatest total profit. Many wants must, of course, 
be left unsupplied ; it is possible that double the 
wants could be supplied at a lower price, with nearly 
as much profit, but that is a matter of indifference to 
the monopoly. What it wants is the greatest total 
profit, and it rather prefers to make it on a small 
quantity than a large, since it is less trouble and risk. 
This is one of the arguments for the control of certain 
necessary monopolies by the people, of which the post- 
office is an example. A private monopoly would esti- 
mate how it could make the most money. Suppose it 
concluded that the largest profit could be made at car- 
rying letters at five cents each ; at the same time, let- 
ters could be carried at two cents, with a total profit 
nearly as large, because there would be several times 
as much business. If the government is in control, it 
will always choose to satisfy the largest number of 
wants at the lowest price, rather than a smaller num- 
ber of wants at a higher price, the total profit being- 
the same. Not caring to make a profit at all, it may- 
see that, at an insignificant loss to itself, it can carry 
ten times the number of letters for the people at half 
the cost to a private corporation, because the latter' 
would not accept the small loss necessary to gain the 
enormous business. 

When the monopoly is not compelled to sell its 
goods at the same price to every purchaser, it can 



310 EXCHANGE. 

charge the full Value in Use to each one ; and thus 
secure far higher average prices. It will, under these 
circumstances, perhaps make even lower prices to 
those unable to pay more, than the price would be if 
compelled to serve all alike. It can afford to sell at 
any price at which it makes a profit, to those to whom 
the goods are worth least, and may get a hundred 
times as much from those able to pay more. In this 
case, the monopoly gets the full Value in Use from 
everybody ; when it is compelled to sell at the same 
price, it gets only the Value in Use from those to 
whom the goods are worth least. There are, however, 
few complete monopolies. Nearly all have something 
to fear from possible competition or legal enactments ; 
so that it is seldom that the price can be carried as 
high in practice as in theory. Most monopolies are 
contented with absorbing the greater portion of the 
business, and with getting a price very much less than 
.could be had in theory. 

'The monopolist will naturally endeavor to fix his 
'prices at the point which will give him the largest in- 
come. If he have a monopoly of the necessities of 
life, such as wheat in a famine, he can take all the 
people have, as did Joseph under Pharaoh ; though in 
modern times, even if the monopolist were not pre- 
vented by moral considerations, the people would com- 
pel him to sell at some price not far above the cost of 
production. Few monopolies are of this character. 
The monopolist knows that people can find some 
way to do without his service ; and, besides, he wishes 
to reach a large number of consumers, since large 



MONOPOLY. 311 

profits must depend on large numbers of people. He 
knows, also, that public sentiment may discourage the 
use of his goods, even at a price that would be profit- 
able to the user ; and the sum which he will add to 
the cost of production on account of his monopoly is a 
matter for careful judgment. The theater manager 
will prefer to sell a thousand seats at three dollars 
each to selling two thousand at one dollar, but the 
popular show may find that it can sell a thousand 
seats at twenty-five cents, when it could not sell a 
hundred at one dollar. Each man who controls a 
monopoly will settle these prices for himself in ac- 
cordance with the circumstances. Moral and other 
considerations sometimes enter in, and one does 
not always take all the profit his monopoly makes 
possible. 



CHAPTER VIII. 

MONEY. 

Money and its substitutes, and credit, are the prin- 
cipal means by which exchanges take place. With- 
out it, very few exchanges would be made. Few ques- 
tions can, therefore, be more important in Economics 
than the money problem. 

Money is anything which is generally received in 
exchange, not for the purpose of use, but with the ex- 
pectation that it will buy anything for sale. The pos- 
session of no mere commodity gives this power. One 
may be rich in land or in cattle, but he will find it 
very difficult to exchange these things, directly, for 
what he wants. Money will buy anything ; hence, if 
he wants to buy, he hastens to exchange his cattle for 
money. The only essential characteristic of money is 
its general acceptability. 

It by no means follows that all money is good 
money. Some very foolish schemes have passed into 
legislation, and nations have suffered greatly from the 
actions of their rulers ; but we are not to condemn 
these schemes by assuming that the circulating medium 
was not money. It is because it was money, made so 
by the acquiescence of the people, that the suffering 
has been so great, and the loss far greater than even 
the sufferers realized. 

(312) 



MONET. 313 

Part I. — Qualities of a Good Monet. 

Unchangeable Values. — The first quality of a 
good money is unchangeableness in values. Money is 
first bought by the holder with what he has to sell — 
his labor, farm produce, manufactures, etc. — and then 
used by him to buy other goods with. He must take 
into account what he has to give for a dollar, just as 
much as what a dollar will buy. He does not usually 
give the same class of goods for money that he buys 
with money. It is an education to learn how much 
a dollar will buy — an education which some people 
never gain. We do not realize the effect of a change 
in the values of money on the common people when 
once they have become accustomed to certain values. 
It is desirable that the average of the values of money 
shall remain the same, so that the change of any par- 
ticular value, as in that of wheat, can be explained by 
a short crop or some other evident cause. There will 
be a constant change in the values of various articles, 
due to natural causes ; but some being in one direc- 
tion and others in the other, the tendency is to bal- 
ance one another. A thousand dollars ought to. buy, 
in the wholesale market, the same average quantity of 
all the articles in common use by the people. 

A change in average prices does not show that the 
values of the goods have changed (since these values 
are measured by other goods), but that the values of 
money have changed ; and it is this variation in the 
values of money which it is all-important to avoid. 
At one time during the Civil War wheat sold at three 



314 EXCHANGE. 

dollars a bushel. The price has since been less than 
one dollar. Does any one suppose that the values 
of wheat were three times as great then as now? By 
no means ; a dollar is now worth three times as much. 
The change is not in the values of the wheat, but in 
the values of the money. 

It is the common people who suffer most by changes 
in the values of money in either direction. One with 
other business to attend to can not always be making 
calculations as to how much of each article a dollar 
ought to buy, or how much more or less it ought to 
buy than it did a year ago. It has required years, 
from childhood up, to fix hi his mind the values of a 
dollar at all. It is no trifling part of the education to 
learn the lengths of a yard, foot, mile, weight of a 
pound and size of a gallon, so that when any distance 
or weight is mentioned one will have a vivid concep- 
tion of it. It requires more years of experience to 
form a vivid conception of the values of a dollar. The 
child knows that the nickel will buy so much candy, 
but it is long years before he gets fixed in his mind 
the prices of all goods he is likely to want. If, now, 
the values of the dollar change, the prices of all 
these goods change, or ought to change, and he has 
them all to learn over again. He is not likely to do 
it. He unconsciously estimates the dollar at its old 
value. 

If any one doubts the enormous loss to the mass of 
the people caused by every change in the value of 
money, he has only to reflect how difficult it is for 
even the more intelligent to change habits once formed. 



MONET. 315 

One becomes accustomed to expecting that a dollar will 
buy about so much of what he wants. If there is a 
change in the price of any article, he wants to know 
the reason why. Is it scarcer, or is the dealer making 
more profit? When the values of money remain the 
same, he can usually ascertain these facts and act ac- 
cordingly ; but when the values of money are contin- 
ually changing, the price of all articles must change 
with it, and he is at sea. He can not figure it out. 
Not one man in a thousand in the population of the 
United States can figure it out, and the opportunities 
for a few men to make money by taking a little from 
all the people are vastly increased. It is good times 
for the making of fortunes by a few, rather the lucky 
than the intelligent, but it is bad times for the people 
at large. As one does not know what he will have to 
pay in the future, he does not know how much he 
ought to have for his labor or the commodities he 
has for sale. 

It must be remembered that a fall in the value o£ 
money means a rise in prices ; and a rise in the value 
of money, a fall in prices — always the reverse. A 
dollar rises in value because it will buy more wheat — 
two bushels instead of one ; but when a dollar will 
buy two bushels of wheat, wheat has fallen in price to 
fifty cents. Exchange is like a balance : when one side 
goes up, the other side goes down. When the value 
of money goes up, prices of other things go down. 
When the value of money goes down, the prices of 
other things go up. 

It is impossible, except by more pages of detailed 



316 EXCHANGE. 

illustration than there is room to insert, to bring our- 
selves to realize anything like the loss which conies to 
~the people at large by any change in the value of 
money. Every change tends to make the rich rel- 
atively richer, and the poor relatively poorer. It 
tends to the failure of great numbers of honest and 
fairly well-to-do business men, and to the building up 
of large fortunes. Every change in the value of 
money opens opportunities for a more unequal dis- 
tribution of wealth. 

Deferred Payments. — Changes in the value of 
money in relation to debts and credits are more easily 
brought home to the conception of every one. In 
our civilization debt and credit are unavoidable. It 
is by the loan of capital from those who are not in a 
position to use it to the best advantage, to those who 
can profitably use it in production or business, that 
the wealth of the country is greatly increased, and the 
wants of all better supplied. But when one borrows, 
what is he to repay ? What can he pay ? The farmer 
<3an pay only with farm produce ; the manufacturer, 
with the products of his factory. If one promises to 
pay money, when the note is due he must go and buy 
■the money with his farm produce or the goods he has 
manufactured. Only in the rare case of the gold 
digger can he pay the debt out of the products of his 
business. He must buy the money to pay with. It 
is just as important to know how much the money will 
cost as to know how much money one is to pay. 
Every borrower unconsciously assumes that it will 
cost just what it did when he made the loan. If 



MONET. 317 

wheat Is a dollar a bushel, the farmer assumes that, 
with ordinary crops, a bushel of wheat will buy a dol- 
lar when he has the debt to pay. He is not likely to 
take into account that, with ordinary crops, it may re- 
quire twice as many bushels of wheat to buy a dollar as 
it did when the loan was made. This was practically 
the state of affairs some years after the Civil War. 
Men had purchased farms, paying, say half their 
value in cash, and giving a mortgage for the other 
half. Paying debts is slow work ; and, although the 
mortgage may have been renewed, or replaced by an- 
other mortgage, many farmers paid little more than 
the interest ; and at the end of ten years owed as 
much as at the beginning. But money had doubled 
in value. It took just twice as much farm produce 
to buy a dollar as when the debt was made. The 
creditor got just twice as much value as he loaned, 
because a dollar was worth twice as much. The farm 
which was worth $4,000, for which the purchaser 
gave $2,000 cash, and a mortgage of $2,000 more, 
is now worth precisely the face of the mortgage, and 
the purchaser has lost his original $2,000. Where 
the mortgage has been paid, and the land is worth 
as much as when it was bought, it is because of the 
natural rise in its value ; and the creditor has absorbed 
the value of that rise instead of the farmer. He has 
also absorbed a considerable portion of the farmer's 
earnings. Had there been no change in the value of 
money, the creditor would have got precisely as much 
as he loaned, and the farmer would be seen to have 
accumulated more property, or perhaps have lived 



318 EXCHANGE. 

Letter in the meantime. The increase in the value of 
money has thrown the great gain in national wealth 
into the hands of the few, and built up a few fortunes 
of millions, which would otherwise have been distrib- 
uted more equally among the people. 

A decrease in the value of money, with the con- 
sequent general rise in prices, is also unfortunate. It 
is the creditors now who lose. The loss in either case 
is not to debtor and creditor alone ; it is to the whole 
country. It makes business uncertain, teaches the 
people habits of speculation, and gives fortunes ta 
the lucky and unscrupulous, rather than as a reward 
of honest industry. There is no national question of 
so much importance as the unchangeable value of 
money. Changes in the yardstick and the pound- 
weight would be a less misfortune than changes in the 
value of the dollar which measures all contracts. 

A continued increase in the value of money paralyzes 
business. It is usually the enterprising manufacturers^ 
farmers and business men who are in debt. They are 
the life of business ; without them the wheels of pro- 
duction move more slowly. Without business men 
who borrow money, great numbers of men are thrown 
out of employment, simply because there is no one to 
set them at work. The capitalist can not do it. He 
may be a minor heir, an insane man, a pleasure-loving 
man in Europe, or a good man who recognizes his own 
lack of business ability. The capital may be in banks, 
belonging to owners of small sums which they can not 
use in production. The greater portion of this capital 
will not be used to keep the men of the nation em- 



MONEY. 319 

ployed, and to carry on production economically, ex- 
cept in the hands of competent borrowers. How 
much better for the country when a competent young 
man runs in debt for a farm with a reasonable pros- 
pect of paying for it during his lifetime, than if the 
same young man is content to remain a tenant ! 

Nothing is so discouraging to a debtor as to feel 
that he must pay more than he borrowed, and where 
money is increasing in value he must pay more. The 
price of goods is continually falling, and men will not 
do business on a falling market if they can help it. 
They would rather be out of business and let the pro- 
duction of the country stop ; and this means a finan- 
cial panic, in which rich and poor lose ten times what 
the creditor has gained by getting a little more value 
than he loaned. 

If there were to be any continued change in the 
value of money, it would be better to have it slowly 
decrease rather than slowly increase, because business 
is always active on a rising market. Now, it is not 
simply that business men, who are mostly borrowers* 
make a little more profit ; the important result is that 
business is active, and every man in the country has. 
an opportunity to work ; all capital is employed,. 
Mills do not stand idle. More goods are produced,, 
and the people have more. Wants are better sup- 
plied. It is a question, indeed, if full activity is ever 
seen except on a rising market, with at least a slight 
fall in the value of money. 

But how about the creditor ? Will not he be paid 
less value in goods than he loaned? Certainly. He 
21 



320 EXCHANGE. 

loses as much as the debtor gains, directly; hut the 
great gain to the country is a hundred times this, in 
the activity of business, in the keeping of men at 
work, and in the prevention of waste. It is probable 
that most creditors would gain in the constant employ- 
ment of their capital, and in fewer losses through fail- 
ures, more than they lose in a slight depreciation. 
But the real protection to the creditor is in the oppor- 
tunity of obtaining higher interest, sufficient to make 
' good the depreciation of his capital. Money is now 
loaned on the undoubted security of government bonds 
at less than three per cent., free of taxes. If money 
were depreciating in value at the rate of one per cent. 
a year, the rate of interest would rule at least one per 
cent, higher. Not so much through an endeavor to 
keep good one's capital, as from the fact that the 
greater demand for loans in active business would 
carry the rate of interest up. So that it is not im- 
possible that the increased rate of interest would ac- 
tually give the lender returns more than sufficient to 
balance his loss. 

But this has been written only for the sake of mak- 
ing the subject clearly understood. Justice requires 
that we use our utmost endeavor to prevent any 
change in the values of money ; but, if there is to be 
a change, it is far better that it be in the direction of 
a slight depreciation instead of an increase. An in- 
crease in the value of money means idleness, an enor- 
mous loss to a nation, in addition to the small amount 
unjustly paid by the debtor to the creditor. A de- 
crease in the value of money means a great gain to 



MONET. 321 

the prosperity of the country, notwithstanding the 
small sum the debtor unjustly retains from the cred- 
itor. 

Portability. — In a simpler age, the second require- 
ment for a good money was portability. As money is 
constantly changing hands, it is desirable that it be 
convenient to handle. Paper money answers this re- 
quirement best of all, since it is so easily carried. 
The portability of other forms of money is not of 
much importance to-day, because in civilized countries 
they will largely be replaced by paper. Gold certifi- 
cates are now frequently seen, which say on their face 

that some one has deposited dollars in gold in the 

United States treasury, which the bearer of this cer- 
tificate can have by calling for it. He seldom calls, 
because it is more convenient to hand the paper out in 
payment. It would make no difference, in this case, 
whether we consider the paper or the gold the money, 
so that we do not count both. But, as a matter of 
fact, the gold is the money, and the certificate the 
evidence of title. Payments are made by transfer- 
ring the title to the gold from hand to hand. (This is 
not true of Government notes, called greenbacks, 
which are not certificates of deposit, but promises to 
pay.) An iron or a wheat money would be at once 
represented by paper certificates. Purchasers in a 
civilized country would not carry the iron about with 
them, but would store it in a warehouse and transfer 
the title by a certificate. The question of portability 
is therefore no longer of great consequence. 

This has a bearing on the use of Silver. It was 



322 EXCHANGE. 

formerly claimed that a silver money was objectionable 
on account of its weight. Even gold has considerable 
weight, but both it and silver are likely to be repre- 
sented by paper. The cost of storing silver is no 
greater than that of gold when the risk of theft is 
taken into account, because no great value of silver 
can be carried off secretly. It is an admitted prov- 
ince of all governments to coin money. It is but a 
step to storing that money and issuing certificates of 
title to be transferred from hand to hand in place of 
the money itself. No one has ever objected to the is- 
sue by the United States of such gold certificates. If 
silver coin were the only money, it would likewise be 
thus deposited under our present laws, and the title 
to its ownership transferred in ordinary trade by 
certificates. The question of portability, therefore,, 
scarcely enters into consideration. 

Durability. — A third requisite for good money is 
durability. It is important that money shall not wear 
out with the using, or deteriorate with keeping. Gold 
wears rapidly by the using, and the loss must be borne 
in the end by some one, in this country by the last 
user, who must bear the whole loss. A good money 
must not deteriorate by storage in a bank vault, or 
suffer too much in actual use. An exception is to be 
made of paper money. This costs so little to print 
that we can afford to wear it out and pay the expense 
of replacing the bills with new. Paper, on account of 
its portability, convenience, and the ease with which 
worn notes can be replaced, is certain to be the actual 
currency which passes from hand to hand in the fu- 



MONEY. 323 

-ture. It may be certificates stating that coin is held 
subject to order, or it may be notes whose redemption 
is in some way secured. The cost of issuing a second 
gold or silver certificate, in the place of one worn out, 
is trifling. The gold and silver whose title is trans- 
ferred is not affected thereby. 

There are other desirable qualities of money, such 
as uniformity and divisibility. Cattle have been 
used as money, but not all cattle are of the same 
grade, and the debtor will seek to pay in the poorest. 
Another objection to cattle is the lack of divisibility. 
An ox is a large piece of money, and inconvenient for 
small purchases. Paper, of course, has a uniform 
value ; one note, of the same denomination, is as good 
as another ; and issues can be made of any denomina- 
tion. 

The cost of issuing a one-dollar note is the same as 
one for a hundred dollars, and the smaller note wears 
out much the more rapidly. No one now thinks of 
using paper for sums smaller than one dollar. In Eng- 
land the smallest note issued is for twenty-five dol- 
lars, though many favor the issue of one-pound notes. 
Efforts in this country to withdraw the one and two 
dollar bills have met popular objections, but it would 
be much better if all paper currency were of the de- 
nomination of five dollars and over. 

Acceptability is usually named as a quality of good 
money, but it is this that makes it money. Nothing- 
is money that is not generally accepted, and anything 
which is generally accepted becomes money, though it 
may be a very poor money. 



324 EXCHANGE. 

It is worth while to notice the difference between 
paper money and gold and silver certificates. Paper- 
money is of various kinds. It has sometimes been ir- 
redeemable on demand, though with an expectation of 
payment in the future. Our present paper money is 
redeemable on demand in coin. Here, it is the paper, 
and hot the coin held for its redemption, that consti- 
tutes the money. It is not a certificate of title to a 
given quantity of gold or silver. It is a note, and the 
reserve is much smaller than the volume of the cur- 
rency. In estimating the amount of money in circu- 
lation, however, we should not count the specie reserve 
for paper money, since while it is held as a reserve it 
is no longer used as money. The increase in the cir- 
culation due to the paper is only the difference be- 
tween the sum of the paper and that of the reserve. 
We did not consider gold and silver certificates as- 
money at all, because it is understood that payment 
is made by the gold and silver itself, the title to which 
passes from hand to hand. This is not true of paper 
money which exceeds the amount of its specie reserve. 
Of course, if one were to insist on considering the gold 
and silver certificates as money, we should then, be 
driven to say that the specie to which they are the 
title is not money. The paper and the specie reserve 
can not both be money, since the currency is not in- 
creased by the issue of the certificates. There is no- 
more money than if the coin itself passed from hand, 
to hand, and the certificates had not been issued. 



MONEY. 325 

Part II. What Determines the Value of 
Money ? 

We have seen the essential quality of a good money- 
is that it shall have steadiness of value, and we are 
unprepared to form any opinion about the stability of 
any form of money until we know the causes on which 
its value depends. 

The value of money depends on supply and de- 
mand. Gold and silver have values for ornament, 
and for plate. If neither were used as money, there 
would be demand for all the gold and silver of the 
world, but at lower values. Let us suppose that gold 
is worth five dollars an ounce. Now, let it suddenly 
be adopted as money, and a hundred million ounces 
be required for the money purpose. Would not this 
new demand rapidly raise the value ? It might 
double it. It might make it ten times as great. The 
increase of the value of gold could increase production 
only to an irregular extent. If gold were raised as 
wheat, the new demand would have very little perma- 
nent effect, since double the quantity of wheat could be 
produced at very little increase of cost. But gold is 
not regularly produced. The amount accessible on 
the earth is limited. An increase in the value would 
cause the working of some mines which were before 
unprofitable, but, at even ten times the price, the in- 
crease in the amount to be had is not great. The 
value of gold is fixed rather by the rules of monopoly, 
since the quantity is limited. The value of gold will 
therefore be determined by the balance between the 



326 EXCHANGE. 

demand for all purposes, and the supply. Gold has 
one peculiarity. Being desired for ornament, the de- 
mand may be greater at a high price than at a low 
price. If it were worth less than silver, it would be 
discarded by many persons who now use it simply be- 
cause its cost prevents its being too common. The 
more valuable it becomes, the more attractive it is to 
them, and hence the demand may even increase with 
the increase in value. How much effect the demand 
for use as money has on the value of gold, no one can 
estimate. It could be shown only by the general de- 
monetization of the metal by all nations. 

The value of silver is governed by the same laws as 
that of gold, with the exception that the product of 
silver can be more easily increased. There exist vast 
quantities of silver-bearing rock of too low grade to 
work with profit. If the price were greatly increased, 
the output would also increase. The demand for 
silver to use as money is one of the demands which 
give it value. Were it demonetized by all nations, its 
value would sink precisely as would that of gold. 

Paper is the only remaining form of money neces- 
sary to consider. What gives value to paper which 
can be printed at a nominal cost ? 

1. The anticipation of redemption, either on pre- 
sentation or in the future. If the promise is to pay on 
demand, in coin, and the paper is, in fact, redeemed 
over the counter of the bank without hesitation or 
trouble to the holder, it is worth as much as the coin. 
Even if specie payment be suspended, and there is a 
general confidence that the note will be paid at some 



MONET. 327 

"future time, it is worth its face, less such discount as 
the general opinion may fix for the risk and delay. 
This was the condition of treasury notes for some 
years after the war. There was full confidence that 
at some time they would be redeemed in specie. 

2. The quantity in circulation. The value of 
everything is fixed by supply and demand. If there 
were, or could be, no money but paper, it would be 
given a value by the demand for money. The larger 
the supply, the lower the value. 

Paper Money Keduces the. Value of Gold 
and Silver.— A paper money increases the total 
supply of money. It is the same as an increase in the 
supply of gold and silver, which, of course, reduces 
their value. The value of gold depends on the sup- 
ply and demand for all purposes ; if paper is substi- 
tuted for one of its uses, the effect is the same as an 
increase in the supply of gold. 

Fiat Money.^A paper money of altogether a dif- 
ferent character has been the subject of some discus- 
sion in the United States. It is merely stamped 
paper, with no promise of redemption. Would such a 
paper be money, and, if so, what would determine its 
value ? Whether it would be money or not, depends 
on whether it would come into general circulation. If 
the treasury were to issue paper on which is printed, 
*' This is a dollar/' it would be money if it were volun- 
tarily accepted in payment by every one. It could be 
given forced circulation at the first, by enacting that 
it be received in payment for debts, and by govern- 
ment officials for their salaries. If such a law were 



328 EXCHANGE. 

sustained by the courts, the creditor would have no- 
redress, even though the paper were worthless and his 
claims were confiscated. The government official 
would have the choice of acceptance or resignation. 
But this would not make it money. The test of , 
money is its voluntary reception by those who have 
something to sell. If the people should take it, it 
would be money ; otherwise, not. 

If it were accepted by the people, what would deter- 
mine its value ? The amount issued, and the extent 
to which it should be used in exchanges. If it re- 
placed all other money, and were accepted by every 
one, it would be worth nearly the sum named on its- 
face, as long as its issues toere small i There is a 
demand for a certain volume of currency. There- 
would be nothing to replace this stamped paper, ex- 
cept coin, which costs as much as the face of the 
paper. As there is a demand, and the supply is- 
limited, there is no reason why it should depreciate 
in value. As soon as the supply became excessive,. 
its value would decrease. The more issued, the less- 
it would be worth. If, at any time, people refused to 
receive it, and substituted something else, the demand 
would be so much reduced, and its value so much 
lower. In case of a panic and a general refusal, it 
would instantly become worthless. 

The nearest approach to this kind of money, of late 
years, was the Confederate currency. This, to be 
sure, was a promise to pay, and was first received by 
the people with the expectation that it would be re- 
deemed. That expectation never quite vanished as 



MONEY. 329 

long as the money circulated at all; yet the issues 
were so excessive, and the expectation of redemption 
so slight, as practically to give it, toward the end, the 
character of mere stamped paper. It was received 
because there was nothing else. It was necessary to 
have some medium for exchange, and this necessity 
gave it a trifling value. 

It is hardly reasonable to suppose that stamped 
government paper — -fiat money, as it has been called 
— could gain a circulation in the United States. Sell- 
ers would not voluntarily receive it. If it were once 
in circulation, and the habit of receiving it formed, a 
very limited amount might hold its value for a time. 
But it would be a money very dangerous to stability, 
and in a panic the loss in the derangement of business 
would be many times the cost of coin which would 
have filled its place. 

Stamped paper is not to be confused with paper 
money redeemable in something else than coin, or 
even redeemable at some future time. A paper 
money redeemable in interest-bearing bonds would, 
of course, be worth as much as the bonds. Several 
such schemes have been proposed, but there are dif- 
ficulties in the way. Such paper money would have 
the value of specie, as long as its issue was not ex- 
cessive, even though the interest-bearing bonds should 
fall considerably below par. The reason for the fall 
in the value of the bonds would be the fact that 
higher interest could be obtained in other investments. 
The demand for the money redeemable in them would, 
as long as the supply was not excessive, keep its value 



330 EXCHANGE. 

up to the cheapest thing which could take its place, 
which is gold or silver coin. If the volume issued 
were greater than the amount of coin which would 
otherwise be in use, the money would depreciate, be- 
cause the supply would be greater than the demand. 
The money could not fall below the coin value of the 
bonds. If the interest-bearing bonds were to rise 
above par, the currency would at once be exchanged 
for bonds, and its place would be taken by gold and 
silver coin. 



Part III. — How Can We Secure a Money of 
Uniform Value ? 

This is the important quality of a good money. 
There are many who advocate gold as a standard. 
But the changes in the value of gold are very great, 
though not usually very sudden. By the values of 
any money we mean how much it will purchase in the 
commodities in daily use by the people, either directly, 
or indirectly — as steel is purchased to build railroads 
to carry grain and manufactured goods. The fluctua- 
tions of gold are still further increased by the action 
of governments. Nearly all the annual production of 
gold is now required for use in the arts ; and a larger 
or smaller demand for use as money tends to rapidly 
increase or decrease the value of the metal. When 
the United States resumed specie payments, it was 
compelled to draw large quantities of gold from 
Europe. This increased demand could not help in- 
creasing the value of the metal, and thus lowering the 



MONEY. 331 

of goods. When Germany adopted a gold stand- 
ard, the effect was in the same direction. France 
has since been accumulating gold. The Austro-Hun- 
garian empire is now seeking to establish a gold basis 
for its currency. This bidding of all nations for gold 
as a reserve for currency can not fail to increase its 
value — -its price as measured by goods. If all the 
silver-using nations were to adopt a gold standard for 
their currency, it would send the values of gold up, 
nobody knows how far, certainly to double those at 
present. 

The Tabular Standard.— For many years econ- 
omists have seen that this is the only honest standard 
of value. It has been proposed to take the wholesale 
prices of a certain number of commodities, from 
month to month, and year to year. These should in- 
clude all the articles which enter largely into the satis- 
faction of the wants of the great majority of the peo- 
ple. One hundred articles would perhaps give a fair 
average result. These articles would be taken in the 
proportion of the values produced each year. Let 
us see how much a dollar will buy of all of these 
hundred articles on the first day of July, 1893, and 
let this be the standard forever after. A thousand 
dollars is the quantity of these goods which a thou- 
sand dollars of our present money will now purchase. 
Here is strict justice — justice to the debtor, justice to 
the creditor. A dollar represents a certain quantity 
of the world's resources. If one lends it to-day, 
when the dollar is repaid, ten years hence, it shoidd 
buy just as much, no more, no less, than when he 
lent it. 



332 EXCHANGE. 

On account of imagined difficulties in using a 
money of this kind, it lias been proposed to continue 
the use of our gold and silver and paper as at pres- 
ent, and to employ the standard only for correction 
once each year, or term of years ; to ascertain how 
much a dollar will buy each day in the year, and 
take the average, at the end of another year, to see 
whether it buys more or less, and increase or reduce 
the amount of all promised payments accordingly. 

A better way would be to use the standard itself. 
Suppose the United States were to issue treasury 
notes, payable in gold or silver, it being specified 
that a thousand dollars is as many grains of gold or 
silver as will buy certain quantities of one hundred 
named articles at wholesale prices, the amount to be 
announced from month to month by the statistical of- 
fice. The wages of labor should be included among 
other things which money will buy. Every merchant 
in the world would have an interest in preventing an 
error of a fraction of a cent, and we may assume that 
the reports would be accurate. This would be good 
money. It would be paper money, the most conven- 
ient form ; its value would be the same from month to 
month, and from age to age. It could not be issued 
in excess, because any excess would be returned for 
redemption in gold. Very little would be redeemed, 
mostly for those who wished the gold for export, but 
the certainty of redemption on presentation would 
give value to the entire issue. One would not know 
how many grains of gold will be paid hi redeeming 
a thousand-dollar bill a year hence; but he would 



MONEY. 333 

know that a quantity will be paid which will buy 
just as much, and no more, in the world's markets, 
as the quantity of gold which would be paid to-day. 

The difficulty with the Tabular Standard is that it 
is not easy of comprehension, except by those of some 
education and intellectual habits. It is not an easy 
system to popularize. 

Bimetallism. — Next to the Tabular Standard, the 
most practical plan for lessening the fluctuation in the 
value of money is bimetallism. 

Bimetallism is using both gold and silver at a given 
ratio of weight. The theory is that by permitting the 
use of either metal, the cheaper will be coined until 
the increased demand for it raises its value to that of 
the other. It is not expected that the metals will fall 
apart at all, but that if the supply of one increase 
more rapidly than that of the other, it will be coined 
the more rapidly. 

Suppose, now, that the leading commercial nations 
agree that they will coin all the gold and silver 
brought to their mints, free, at an established ratio, 
say one ounce of gold into the same number of dollars 
as twenty-four ounces of silver. This means that they 
must use gold and silver in such proportions as may 
be necessary to maintain their values at the standard 
ratio. If the price of one metal for a time rules so 
high that none of it comes to the mint, these nations 
increase their currency only by means of the other. 
In an extreme case, the coins of the dearer metal 
would be melted up for use in the arts. Nations 
which agree to bimetallism must, of course, be pre- 



334 EXCHANGE. 

pared to go to the length of using either gold or sil- 
ver exclusively, if necessary to maintain the ratio ; but 
this would never happen with a number of commercial 
nations in the league. 

The more nations in such a league the stronger. 
No league could maintain a ratio beyond the market 
value of either metal if it were wholly demonetized ; 
but if either metal were wholly demonetized, its value 
would probably sink to less than half that at present, 
so that the limits within which bimetallism could be 
maintained by a union of all the nations in the world 
are pretty wide. The ratio which should be selected 
is that which would cause the use of both metals, and 
of about an equal value of each. Any tendency of 
either metal to fall will then be counteracted by its 
increased use, and by a less use of the other. The 
two metals would be coined in such proportion as 
would maintain their values at the ratio fixed for their 
free coinage. The only way to increase the value of 
either metal is to use more of it; and the way to de- 
crease the value of a metal is to vise less of it. 

This would be a real double standard, and not an 
alternatinof standard as some monometallists would 
have us believe. 

If the United States, or any single nation, were 
now to open its mints to the free coinage of silver, it 
should be at some ratio not far from the market ratio 
of the metals — at present about 25 to 1. It would 
then have only future fluctuations to deal with. 

The object of bimetallism is to limit the fluctuations 
in the value of money. 



CHAPTER IX. 

SUBSTITUTES FOR MONEY. 

There are substitutes for money, which save the use 
of money itself. They are not money, because they 
are not generally received by every one for anything 
he has to sell ; they are not in general circulation. 

1. Bank Checks. — The substitute which most read- 
ily occurs to every reader is bank checks. These are 
not in general circulation ; they usually make but one 
payment each before being returned to the bank. 
They are not accepted in complete payment, being 
merely an order to a bank to pay the money. If the 
bank pays, well ; if it refuses the check, the drawer is 
liable. Neither is their use general, but it is confined 
to a limited class. Even a large manufacturing estab- 
lishment does not pay its employes in checks, but in 
money. It pays other business firms by means of 
checks. 

Although bank checks are not money, they save the 
use of money. Each check saves one payment. If it 
were possible for every person to use checks and make 
all payments with them, the only use for money would 
be as a bank reserve. 

The advantage of saving the use of money depends 

on whether we mean gold and silver, or paper money. 

To save gold and silver is to release them for other 

purposes. The cost of a metallic currency is the in- 

22 ( 335 ) 



336 EXCHANGE. 

terest on its volume. The cost of paper money is 
only the printing — not much more than that of bank 
checks. The reserve for checks should probably be as 
great as for paper money, so there is no great saving 
in a general substitution of checks for paper money. 
They prevent theft, are cleaner to handle, furnish a 
record of transactions, and are more desirable in 
many ways for a considerable number of people. 

2. Book Accounts. — The real substitute for money 
is book accounts. Bank checks are only a part of a 
system of book-keeping by which accounts are kept 
between the depositors of the bank ; and, through the 
clearing-house (the bank of banks), between the de- 
positors of all banks. The simplest form of book ac- 
counts, as a substitute for money, is that of a country 
store. Let us suppose a farmer, who gets pretty 
much all his family uses — groceries, dry goods, cloth- 
ing — at this store. The goods are charged to him. 
He sells his wheat, wool, butter, eggs, to this store, 
receiving credit for them. There is a settlement, per- 
haps once a year, at which the balance is either paid 
in cash, or carried over to begin another year. No 
money need, therefore, be used between these parties ; 
the book account is a substitute. In this country 
store the exchanges are made directly, and without the 
intervention of money. Its only use is a measure of 
value. The farmer does not know exactly what he 
will want in exchange for the load of wheat. He 
trades it for his choice of anything in the store, to be 
delivered when he is ready for it. As he measures 
the quantity of wheat by a pound weight, and the 



SUBSTITUTES FOR MONEY. 337 

■wood he sells by the cord, so he measures the value of 
this wheat by the dollar value. It is agreed between 
him and the merchant that, in exchange for this 
wheat, he shall have the value of a certain number of 
dollars in goods. He gets the goods for the wheat. 
The important thing to him is that the dollar measure 
shall not stretch. He does not want the goods to rise 
in price after he has sold his wheat. 

If the reader is curious to see how the system of 
•exchange by book-keeping is extended beyond the 
country store, he is referred to almost any good de- 
scription of banking. The merchant buys his goods 
without money, and an account is made of them. He 
•ships the country produce he takes in exchange to 
various business firms. They give him an order 
(check) on a bank for the value ; he transfers this 
order (directly or indirectly) to the men of whom he 
bought the goods. He probably divides it up by 
sending the orders (checks) he receives to his own 
b>ank, having it make a book account of them ; and 
then gives his own order (check) to the men of whom 
he buys goods, and the bank keeps the account. He 
may not handle a dollar bill in the whole transaction. 
He sells the farmer goods, without money. He buys 
the farmer's produce, without money. He sells the 
23roduce to a dozen men, and gets no money. He buys 
his stock of goods of various firms, and pays no 
money. It is trade all the way through ; and the 
b>anks keep the account, on the orders (checks) of the 
parties, as they agree on the terms of each trade. 
The wholesaler buys of the manufacturer without 



338 EXCHANGE. 

money, and turns over the orders he has received from 
the retailer. Even international exchanges are man- 
aged by a system of book-keeping. When money is 
paid, it is gold or silver, and the shipment of one per 
cent, of the exchanges in gold excites comment in the 
newspapers. The large transactions, the great busi- 
ness of the world, are done by book-keeping, and not 
by money. One reason for this is the danger that 
large sums of money would be lost or stolen. 

The reader may by this time wonder if money is 
used at all. It comes in for the smaller payments. 
The factory sells its goods for a book account, but it 
pays its workmen in money. Such country stores as 
have been described exist, but there are more which 
sell for cash. The traveler pays in money. He can 
not give a check for his hotel bill or railway fare. 
Most of the smaller transactions of life, especially be- 
tween strangers, are settled in cash. There is usually 
a balance on settlement of book accounts, which is 
often paid in cash. Then a vast sum of real money 
is required as a "reserve," to make good all the de- 
mands for cash that arise in this complicated business. 

All substitutes lessen the demand for money itself ; 
and, hence, lower its value. If substitutes took the 
place of all the money of the world, the value of gold 
and silver money would sink to what the demand for 
use in the arts would give. The money demand for 
gold and silver now keeps their value far above this 
point. Were it not for the substitutes, and for paper 
money, the value of gold would be several times as 
high as at present. 



SUBSTITUTES FOR MONEY. 339 

3. Credit. — Credit has been treated by some 
writers as a mystic thing, and by others as a material 
commodity like iron or gold or silver. Like most 
other popular terms, it has several significations. 
One is said to have credit at a bank so long as he has 
money deposited there ; that is, his credit is simply 
bis own money left at a bank for convenience. But 
what is meant by credit in the ordinary sense, is 
rather the extent to which one can borrow money, or 
the extent to which he can purchase goods without 
paying for them on delivery, the sums for which he 
can " get trusted." 

The sooner we understand that credit is nothing 
more than the willingness of people to give goods to 
a purchaser on his promise to give something in ex- 
change for them in the future, the better. Their will- 
ingness is his credit. The exchange is not completed. 
One side transfers its goods; the other promises to 
transfer the agreed equivalent in the future. Whether 
one will or not, is a matter of opinion. Is he honest ? 
Will he be able ? Can he be compelled ? His credit 
depends on the answers to one or all of these ques- 
tions. One's credit can not be more than the esti- 
mate of his ability to pay in the future ; it is likely 
to be much less. His ability to pay can not be 
greater than the wealth that he now has, with its nat- 
ural increase, plus the results of his labor power, plus 
the goods furnished him on credit. It is, of course, 
j)ossible that one may be able to give back all he has 
borrowed, if he preserves the goods or uses them 
without loss. He may also give the results of his 



340 EXCHANGE. 

labor, less the cost of his living ; and if he has any 
wealth of his own at the time of incurring the debt, 
he may preserve it until the time of payment. In 
debating whether they will trust a man, people ascer- 
tain — 

1. What he is worth, how much property he now 
has, and estimate the likelihood of his taking care of 
it. If he has " made it " himself, or has taken care 
of it without loss for some years, he may be expected 
to have it at the time for payment of what he pro- 
poses to borrow ; and he will probably have credit to- 
the extent of a certain part of it. If the property is- 
of such a nature that he can give legal security on it, 
so that he can be compelled to sell it for the purpose 
of payment, he is still more likely to have credit. 
But as few people wish to resort to legal enforcement,, 
one's credit will also be affected by his reputation for 
honesty, and the likelihood that he will pay without 
trouble. A rough popular estimate of one's credit 
from this source is usually something like half of 
what his property is worth. 

2. But if goods are given on one's promise to pay r 
he has the goods, and may naturally be expected to 
have them, or their results, at the time of payment. 
It is possible, therefore, for one who has no property 
at all to have credit which consists of his reputation 
and estimated power of labor and management of 
business. If people generally believe a man is honest, 
and that he has the power of managing property so 
as to make it bring the largest returns, he may have 
credit to an almost unlimited extent. For the goods 



SUBSTITUTES FOR MONET. 341 

loaned him are security, no matter how large their 
amount may be. If people believe him to be the man 
we have described, they believe he will have the 
means of payment when the time comes. So that the 
extent of one's credit from this source is almost un- 
limited, and depends entirely on his good name. 

3. There is a third source of credit, which is 
merely one's labor power, independent of the man- 
agement of money loaned. A merchant will some- 
times advance a man food and other means for the 
support of his family, although he has no property, 
and the goods are to be consumed at once. The 
credit of the man in this case is his labor power. 
He may be working a rented farm, and the mer- 
chant believe he will pay when the crop matures. 
He may be working for wages, and will pay when he 
receives them. He may be going a-fishing, and will 
pay from his catch. This kind of credit is not usu- 
ally given for large sums, though the aggregate in 
the United States is very great. 

The credits by which the business of the world 
is chiefly carried on belong mainly to the second 
class named. The manufacturer can not sell his 
goods directly to the consumer. The goods are not 
wanted as fast as produced. No one knows just who- 
will want a particular article, nor when he will want; 
it. A reserve stock must be carried somewhere ; and 
it should be where the consumer can easily find it, 
and examine it when he thinks of purchasing. The 
manufacturer turns the goods over to the merchant 
to sell. The latter might sell them on commission, 



342 EXCHANGE. 

but this plan has not been found to work well for 
most lines of goods. The manufacturer therefore sells 
the goods to the merchant, the latter agreeing to pay 
for them at about the time he hopes to have sold them. 
Now, if the merchant is honest and competent, it is 
safe to let him have as many goods as he is likely 
to sell. When he sells the goods he will have the 
money. He may steal it, may use it in his living 
expenses ; but, if he is the right sort of man, he will 
do neither of these things, and will have enough to 
pay for the goods at their sale. Manufacturers real- 
ize the situation, and it is not uncommon, when in 
the clothing line for instance, there has been a warm 
winter so that the merchant could not sell the goods, 
to " carry him over " — that is, to give him time for 
payment until he can sell them. The extent of a 
merchant's credit is thus the amount of goods he 
can obtain on the promise to pay in the future. 
With the right sort of man the goods may be suf- 
ficient security, and there are young business men 
who have large credit on no other basis. 

But the seller, also looks to see what property the 
^merchant owns, or what other means of payment he 
las, so that his credit usually rests partly on the first 
"basis named. The seller also looks to the probability 
of the purchaser being able to use the goods profit- 
ably, either as a merchant in selling, or as a manu- 
facturer in further production. A business man often 
has credit " for anything he needs in his business," 
but for nothing more. A manufacturer or wholesaler 
will let one have all the goods he thinks he can dis- 



SUBSTITUTES FOE MONET. 343 

pose of within the time of payment; but he would 
not furnish money for living expenses, speculation, or 
for other» uses. Indeed, we should make a broad dis- 
tinction between the credit of men engaged in busi- 
ness, by which they obtain materials for use in their 
business, and credit for articles for unproductive con- 
sumption, credit for living expenses. 

The form of credit mentioned first under this head, 
is distinct from both of these. Money is there loaned 
on the property one has, as by a mortgage on a farm ; 
and the disposition of the money or goods loaned is 
not of so much consequence, since payment is sure in 
any case. Banks are supposed to deal mainly with 
the second class of credits. When the manufacturer 
has sold the merchant goods to be paid for some 
months hence, the bank buys the account, takes the 
place of the manufacturer, and receives the payment 
from the purchaser. It does this partly on the faith 
that the goods are in existence, and when returns 
come from them the notes will be paid. Banks dis- 
like to deal in accommodation paper, which is not 
given for goods. 

Credit, therefore — any particular individual's credit 
— depends on other people's opinion, not only of the 
value of the property he has, but of the man himself. 
This opinion is likely to change, and may change sud- 
denly. In a panic, when all persons are frightened, 
confidence in one's ability to pay may be destroyed. 
One's credit may expand, or shrink to nothing with- 
in a few days, and that through no fault of his own, 
and for no good reason. Credit is the opinion of the 



344 EXCHANGE. 

people, and the people are fickle. It depends on the 
laws of the human mind. Even though the person 
who furnishes the goods has full confidence in the 
ability of the second party to pay, the opinion of 
others, and even of the populace, may make it unsafe 
to give credit. 

The credit of any person is therefore an uncertain 
and a variable quantity, depending on many causes, 
some of which it is impossible to foresee; and if we 
were to conceive of such a thing as the total credit of 
all people, it would be now of vast proportions, and 
now shrink to a small fraction of what it was before. 

The term "credits" is, however, often used to de- 
note credits already extended ; and then means the 
value of the goods which have been transferred from 
one party to another on his promise to pay, the ex- 
change being incomplete. More than one credit in 
this sense may, therefore, be based on the same goods. 
The manufacturer sells goods to the wholesale mer- 
chant ; the exchange is incomplete, and credit has 
been given for their value. The wholesaler sells to 
the retailer on credit ; here credit has been extended 
to twice the value of the goods — that is, there may be 
notes out, based on these goods, to twice their value. 
As a matter of fact, the goods and credits have only 
been transferred to second parties. It is expected 
that the proceeds of their final sale will pass from 
hand to hand back to the original producer. 

The advantage of credit is that it puts goods into 
the hands of those who can use them with the greatest 
profit. Without it, those who have wealth would be 



SUBSTITUTES FOR MONEY. 345 

compelled to carry on all the business of the world. 
Other persons' can often use wealth in business to 
better advantage than its owner. After paying him 
more for the use of it than he could make himself* 
they can still make a profit. 

How Credit Saves the Use of Money. — . 
Credits make possible a great extension of book ac- 
counts, by which exchanges take place without the 
use of money. A credit itself saves no money, since 
the payment is only deferred. One gets the goods 
without the immediate use of money ; but, if he pays 
when he has promised, it requires just as much money 
to . make the payment as if it had been made in the 
first place. But the credit gives time for the balanc- 
ing of book accounts which may offset one account by 
another, and no money be required. The world 
becomes one great clearing-house. Every one who 
comes to it owes other people and others owe him. 
By a system of book-keeping, debts cancel debts. 
What one gets is goods for goods. The things he 
has parted with pay for the things he has purchased. 
The trade is complete. It is made without money, by 
the use of accounts. Settlement of accounts, to any- 
thing like the present extent, would be impossible but 
for the time element in credit. The goods received 
in payment would necessarily be delivered the same 
day. Where purchases are made on a few weeks' 
credit, there is time for other transactions which bal- 
ance the first. The supposed case of the farmer and 
the general store is possible only where credit is given 
by one party or the other. They are supposed to have 



346 EXCHANGE. 

a running account for a year, and during the year the 
transactions nearly balance each other. If no credit 
were given, the farmer must take goods on the day he 
sold produce, and to its exact value, or payment must 
•be made in money. What is true of the farmer and 
the general store is true of the largest business trans- 
actions. Country banks keep a balance in a bank in 
the metropolis, thus giving them credit, in order that 
business may be done by accounts, and not by cash. 
Only through credits can book accounts become a sub- 
stitute for money to any great extent. 

Bank Credits. — Credits which are supposed to 
have the most influence as a substitute for money are 
bank credits. A bank lends not only its own capital, 
but its deposits. It can safely lend a certain portion 
of its deposits on short time — sixty or ninety days — 
since they will not all be called for at once. But in 
granting applications for loans, account is taken, 
among other things, of the amount of money the bor- 
rower usually keeps on deposit in the bank. If he 
gives his note for a thousand dollars, that sum is sim- 
ply passed to his credit. He may not draw it out on 
the day of the loan. Part of it may remain in bank 
until the note is due. Seldom indeed does he draw 
out the actual money. He probably pays some debt 
or makes some purchase with a check on the bank. 
This check may be deposited in the same bank, in 
which case no money is required ; the bank has in- 
creased both its deposits and its loans. Even if the 
check is deposited in some other bank, it increases its 
deposits, and the loans of one bank thus appear as de- 



SUBSTITUTES FOR MONEY. 347 

posits on the books of another. The granting of 
loans by banks has been compared to the issue of 
money. It has been said that the currency can be in- 
flated by bank loans as well as by the issue of paper 
money. It is rather a substituting of book accounts 
for money. So long as actual cash is not drawn from 
the bank by depositors, or by other banks in settle- 
ment, the loans enable depositors to do business by 
book accounts. To a certain extent all banks are one. 
While the loans of one bank appear as deposits in an- 
other, the loans of the second also appear as deposits 
in the first, balancing one another. If a bank is in 
real trouble, other banks of the city will frequently 
come to its aid. A large part of the business of every 
city is thus transacted without real money, by the aid 
of book accounts, as previously explained. These 
book accounts would be impossible but for the system 
of loans granted by the banks. One can make pay- 
ments by checks when a bank has guaranteed his 
checks. Where a large circle of men do business by 
checks, they offset one another — that is, the exchanges 
of goods are made by means of book accounts, kept 
by the bank, made possible by the banks granting 
credit in the shape of loans. 

This policy is sometimes carried beyond the danger 
line. It is assumed that the bank has some capital, 
real money of its own, in the beginning, as security. 
If its loans are made with caution, they will even- 
tually pay the deposits ; but the call for the payment 
of deposits may be so sudden that the reserves will be 
exhausted before loans become due. In such cases it 



348 EXCHANGE. 

is necessary for the bank to cease further loans, which 
disappoints those depending on them, and perhaps 
completes a financial crash. With the great experi- 
ence gained in the banking business, and the support 
banks give to others worthy of it, the system is com- 
paratively safe, and enables book accounts to be sub- 
stituted for money to an extent otherwise impossible. 
The one thing to be remembered is that the real 
substitute for money is neither bank checks nor credit 
in any form, but book accounts. They are made 
possible by credit, and checks are a part of their ma- 
chinery. 



BOOK VI. 

THE DISTRIBUTION OF PRODUCED 
WEALTH. 



BOOK YT. 

DISTRIBUTION OF PRODUCED WEALTH. 

Introduction. 

Chapter I. Kent — The Share of Those Who 
Have Possession of the Resour- 
ces of Nature, 355 

Chapter II. Interest — The Share of Produced 

Wealth, 363 

Chapter III. The Share of Good Name, .... 375 

Chapter IV. The Share of Monopoly, .... 382 

Chapter V. The Share of the Producer — Profits 

of Production, 397 

Chapter VI. The Share of the Merchant — Profits 

of Exchange, 406 

Chapter VII. The Share of the Laborer Who 

Works for Himself, 411 

Chapter VIII. The Share of the Laborer Who 

Works for Wages, 420 

Chapter IX. The Share of Labor Which Satisfies 

Wants Directly, 436 

Chapter X. The Booty of the Robber, and the 

Winnings of the Gambler, . . . 441 

Chapter XL The Share of the Government, . . 445 



BOOK VI. 

THE DISTRIBUTION OF PRODUCED 
WEALTH. 

The ownership and control of the means of satisfy- 
ing wants was treated of in Book III., but the Re- 
sources Produced by Human Industry require further 
discussion, because so many persons and so many in- 
terests unite in their production. This book may be 
regarded as a continuation of Book III. When five 
hundred men unite in the production of shoes in a 
modern factory, the distribution of the proceeds is a 
complicated affair. Only a part of the work in pro- 
ducing the shoes is done by the men in the factory. 
The farmer who raised the animals from which the 
skins were taken, and the tanner who converted the 
skins into leather, had as much to do with the pro- 
duction of the shoes as the workmen in the factory. 
Neither will men erect buildings, and make costly 
machinery, without expecting something for their use*. 
How shall the share of each interest be determined?' 
Even if the shoes were divided among all interested! 
parties in just proportion, what would they do with 
them ? They can only exchange them for other prod- 
ucts, and their final reward depends as much on 
23 ( 351 ) 



352 DISTRIBUTION OF PRODUCED WEALTH. 

what they get for the shoes as on the number of shoes 
they make. So that the question finally resolves it- 
self into an inquiry as to what share of the nation's 
product each one who contributes to its production 
should receive. 

Practically, we know, these questions are settled by 
Exchange. The farmer sells the hide or skins, and 
thus transfers to the purchaser his right to a share of 
the finished shoes. The tanner sells the leather to 
the factory, and with the sale transfers his right to a 
share in the finished product. Usually the workmen 
sell their labor, and transfer the right to their share 
to the employer, in return for wages. The fact that 
one owns his own labor implies his right to sell it, as 
well as to use it in production on his own account. 
The manufacturer sells the goods to the wholesale 
dealer, and he to the retailer, and he, at last, to the 
consumer. Each one who has contributed t'Q the pro- 
duction of the goods has thus sold his share ; and the 
price he has received has been determined by Ex- 
change — by the supply of what he had to contribute, 
and the demand for his service, and for the finished 
goods. Even if each had not sold out his share as 
the work progressed, it would have been determined 
by the laws of demand and supply in Exchange. We 
see, then, the need of understanding the laws of Ex- 
change before proceeding to distribution. Distribu- 
tion depends on other principles as well as those of 
Exchange, but we can not treat of the former without 
assuming some knowledge of the latter. 

In theory, any product of human industry should 
first be distributed among the interests which have 



DISTRIBUTION OF PRODUCED WEALTH. 353 

"united in its production ; then each person would use 
his share as he saw fit, exchanging it for such things 
as he most desired, or for the services of others. 
There would then arise a secondary distribution, by 
which all the products of human industry would be 
distributed among the people of the nation, by each 
exchanging with others. In practice, we know, there 
is no distinction between the primary and secondary 
distribution. The members of a co-operative shoe 
factory would not divide the shoes among themselves ; 
but the factory would sell them for cash, and each 
would receive his agreed proportion of the money. 
With the money he must buy such things as he needs, 
and the quantity he can buy with a dollar is just as 
important as the number of dollars he receives. It is 
simpler, therefore, to ask, What share of the nation's 
products will each receive ? 

No more can be distributed than is produced. It is 
true that methods of distribution react on production. 
Under suitable encouragement one puts forth more 
effort ; with freedom and protection to property, more 
is produced and saved than under slavery and inse- 
curity. So far, therefore, as methods of distribution 
react on production, they indirectly increase the sum 
of goods to be distributed ; but in no case can more 
be distributed than is produced. It is a common 
though unformulated idea, that there exists somewhere 
a store of goods from which an unlimited quantity 
can be drawn. No such store exists. There are 
those who suppose that wages might be almost indefi- 
nitely increased, and everybody be better off. An 



354 DISTRIBUTION OF PRODUCED WEALTH. 

increase of wages must diminish the share of some 
other persons, usually of other laborers, unless produc- 
tion is correspondingly increased. If the laborers of 
a country are all employed economically, an increase 
of wages does not mean an increase of production. 
The product to be distributed is, therefore, limited. 
The method of its distribution, and the share of each,, 
we are to study in this book. 

The essential agents of production are the Re- 
sources of Nature, and Labor ; and in modern produc- 
tion, Capital almost always contributes its aid. The 
older Political Economists, therefore, taught that all 
wealth produced was distributed into three shares — 
land, capital and labor. This statement is correct as^ 
far as it goes ; but the great share of Labor is subdi- 
vided into many minor shares, and some classes of 
laborers have little in common. Prof. Francis A. 
Walker was the first to point out the importance of 
the share of the " Undertaker " of the business, 
which he distinguished from the share of the superin- 
tendent and the laborer. Yet this share of the un- 

i 

dertaker of the business is really a part of the great 
share of labor in the economic sense, which includes 
all effort of human beings put forth for the purpose 
of satisfying the world's wants. We shall, therefore, 
consider : first, Rent, the share of those who control 
the Resources of Nature ; second, the share of Pro- 
duced Wealth ; then the shares of other interests 
which are to receive anything from a nation's annual 
product ; and, last, the shares of the various classes 
of laborers, which combined form the largest share of 
aU. 



CHAPTER I. 

SENT: — THE SHARE OF THOSE WHO HAVE CON- 
TROL OF THE RESOURCES OF NATURE. 

The word Rent as used by Political Economists has 
a narrower meaning than in popular speech. It never 
means the sum paid for the use of a building, but 
only that which is paid for the use of the ground on 
which the building stands — the ground rent, as it is 
sometimes called. The separation of the rent of the 
.ground from the sum paid for the use of the building 
is easy, and is common in practice. In some cities 
costly buildings are erected on leased land, with a con- 
dition that there shall be a revaluation every five 
years ; and the rent is increased or diminished as the 
ground is found more or less valuable, by arbitrators 
or the courts. Rent has to do only with the Re- 
sources of Nature, and is the share of the product 
which the owner receives for their use. The econom- 
ic rent of a city lot is precisely the same, whether it 
serves as a foundation for a one-story or a ten-story 
building. The economic rent of a farm is the same 
whether there are buildings on it or not. We must 
always separate the land from the " improvements." 

The Resources of Nature are absolutely necessary 
to production. They are even more important than 
labor, for land uncultivated will bring forth a limited 
amount of food for man, and wild animals and fish 

(355) 



356 DISTRIBUTION OF PKODUCED WEALTH. 

help to supply the wants of the savage ; but labor 
alone is helpless. A thousand laborers would starve 
on an island of bare rock. Land is necessary for 
standing-room and breathing-room, and as a site for 
a dwelling. If the owner of an island on which a 
thousand people were shipwrecked coidd enforce a mo- 
nopoly of the Resources of Nature, he could put all 
the people at work and obtain any share of the prod- 
uct he pleased. All that would be necessary would 
be to allow the people enough to prevent actual star- 
vation. Such, an island owner could get a larger 
share of all that is raised on the island than if the 
people were his slaves ; because under freedom men 
will put forth greater exertions than under the fear of 
the lash, and the island owner need allow no more 
than the necessities of life in either case. This state 
of things was almost realized in Ireland, but woidd be 
impossible where land is plentier. 

On the other hand, on our fertile Western prairies, 
in an early day, land was worth very little. It was 
owned by the government, and there was more than 
the people covdd use. 

We can not say that any particular share of the 
product is due to land, and another share due to la- 
bor ; in one sense it is all due to land, and in another 
all due to labor. Both are essential to production ; 
either can afford to give the other nine-tenths of the 
product rather than do without it. It is, therefore, a 
question of the division of the product : and the share 
which the owners of the land receive for its use is 
named Rent. Our object is now to find how large 
this share will be. 



RENT. 357 

Rent is entirely independent of the question of pri- 
vate or public ownership of land, which has before 
been considered. There would be rent, just the same, 
if all the land were owned by the government ; the 
only difference being that the rent would be paid to 
the government, and make taxes unnecessary. The 
question of the ownership and control of the Re- 
sources of Nature has nothing to do with economic 
rent, which is the share that the one in control of the 
land ( whoever he is ) can claim, or gain by its use. 

Rent is the advantage which the owner of any 
particular Resource of Nature has from its possession. 
The older Political Economists drew their illustrations 
mainly from agricultural rent. They assumed that 
there was some land which, on account of its distance 
from market, poor quality, or other reason, just paid 
the cost of cultivation, so that the owner gained noth- 
ing from its possession. Indeed, every farm might 
have a little such . land. All that the best land pro- 
duces in addition to the cost of cultivation is rent. 
All grain of the same quality sells for the same price 
in the same market. If the poorest land pays for 
cultivation, better land pays something more, and the 
difference is the advantage the owner has from its 
possession. This advantage is rent. By poor land 
we mean, not only poor in quality, but in respect to 
markets, roads, or anything that makes it less desira- 
ble. One man hauls his wheat twenty miles ; another, 
one. The farm near market has an advantage over 
the one farther out, and this advantage is rent. 

Agricultural rent may also be illustrated from di- 



358 DISTRIBUTION OF PRODUCED WEALTH. 

minishing returns, though the thought is not so sim- 
ple. Let us suppose that a farm just pays when 
worked to the point of diminishing returns to the la- 
bor bestowed on it. With the increase of population, 
agricultural produce becomes scarcer, prices rise until 
it pays to work land beyond diminishing returns. 
The additional product is raised at a greater cost of 
labor, and the price for which it is sold pays this cost. 
The other portion of the product is, therefore, raised 
at a profit, and this profit is rent. Suppose that ten 
days' labor on an acre of land produces twenty bushels 
of wheat, and that thirty bushels can be produced 
with twenty days' labor. Now, unless ten bushels of 
wheat will pay for ten days' labor, this additional la- 
bor will not be bestowed. But, then, the first ten 
days' labor would also be paid for by the ten bushels 
of wheat, leaving ten bushels as rent for the land. 
Every farmer knows that production can not be calcu- 
lated thus accurately. Much depends on the seasons, 
and habit. Still, on an average, the tendency among 
intelligent farmers is to work land about as well as it 
will pay to work it. When it becomes more valuable, 
crops requiring more labor are raised ; until, near a 
city, the land is used as a garden and is worth a hun- 
dred dollars a year rent. One can as well afford to 
pay that as to take land farther out for three dollars. 
Rent is the advantage derived from the possession of 
a particular piece of land ; what a man competent to 
use it can afford to pay for its use. 

Even agricultural rent depends more on location 
than on the fertility of the soil; and for purposes 



KENT. 359 

•other than agriculture, rent depends almost entirely 
on location. Why do merchants go to a city? Be- 
cause they can sell more goods. The advantages of 
location may be so great that one will pay a thousand 
dollars a year for the use of each front foot of land 
to build upon. For the use of an acre of such land 
one could obtain $300,000 a year. This is the ad- 
vantage that its possession would give to the owner. 
This is rent. 

For residence purposes rent also depends mainly on 
location. For various reasons — nearness to business, 
good neighborhood, fashion, sanitary surroundings, or 
all combined — one building-lot is far more desirable 
than another. In what we may call the second-class 
•cities of the United States there is a great deal of 
residence land, the annual rent of which exceeds a 
thousand dollars an acre. This is what some persons 
are willing to pay rather than live in less desirable 
locations. 

Economic rent is the same whether the owner uses 
the land himself or leases it to others. The owner of 
a residence lot has the use of it ; the merchant who 
owns his own store has all the advantage of location 
in his business ; the farmer gets the advantage of good 
land or land near market, as compared with farms 
which are just worth working. This advantage is 
estimated in what such land could be leased for. 

Rent is a very large share of the annual product of 
a nation, and increases with the increase of population 
and wealth. Rent is not only a large gross sum, but 
in densely populated countries it is a very much larger 



360 DISTRIBUTION OF PRODUCED WEALTH. 

share of all that is produced than It is in new conn- 
tries. Labor must therefore have a smaller share of 
the annual production of any country, as population 
increases, even if it receives absolutely more. Why 
is the land of New York City in such demand ? Be- 
cause of the great population and wealth west of it. 
Remove this population, and rents would be what they 
were in an early day. The immense population and 
wealth of the United States makes necessary such a 
city as New York, somewhere on the Atlantic coast : 
and the coast line and harbors and latitude make the 
present location the best place for it. A site for busi- 
ness here gives one a great advantage, and that ad- 
vantage is economic rent ; so that the owners of the 
land on which the city stands are now able to take 
immense sums from the total product of the country 
for the annual use of these few square miles of land. 
If they do business here themselves, they make these 
profits by reason of their location ; if they lease to 
others, they obtain rent from them. Either way, a 
large share of the immense business that passes 
through New York must be given to the men who 
own the land on which the city stands ; and this share 
must continue to grow larger as the population of the 
country increases. What is true of New York is true 
of Chicago and other great cities. The owners of the 
land on which any city stands receive a large share 
of the product of the country tributary to it, as rent. 
It is readily seen that there can be no escape from 
rent ; and that in an old and wealthy country, with a 
dense population, rent must absorb a large share of 



RENT. 361 

the annual product, simply because a part of the land 
is much more desirable than other parts. Prices of 
goods must be high enough to pay for using the less 
desirable land, and the more desirable gains the ad- 
vantage. 

Is there any way by which the total share of rent 
can be reduced ? Evidently by a more even distribu- 
tion of population. If all the people flock to a few of 
the largest cities, the demand for residence land must 
be so great as to give the owner larger and larger rents. 
The land near the city will also be more desirable. 
The greater portion of the land of the country has 
really been placed farther from the people, by reason 
of the people moving away from it. The cause of 
rent is the unequal desirability of different pieces of 
land. If, now, there were more small cities and fewer 
large ones, so that the people were distributed more 
uniformly over the country, there would be no such 
demand for a little land near the center of one great 
city, and for residence land about it. The demand 
would be for land in smaller cities ; and there being 
so much more of it, rents must be comparatively low. 
It is not necessary here to discuss the reason for the 
drift of population to the large cities ; but it evidently 
means that the people must pay a very much larger 
share of the annual production of the nation to the 
owners of city land. What is paid to land can not go 
to labor. 

Where there is no rent, the entire product belongs 
to the laborers (in the economic sense of the word) 
who unite in its production, unless they choose to give 



362 DISTRIBUTION OF PRODUCED WEALTH. 

a, portion to the owner of Capital for its use. If an 
Indian cuts down a tree and hollows it into a canoe, 
the Resources of Nature are yet so plenty that there is 
no rent, and the entire canoe belongs to him. Later, 
if he attempts to fell a pine tree, he will find a man 
with a legal title demanding a share of the lumber for 
the removal of the tree. That is rent. That is the 
advantage one has in the possession of the ground the 
tree stands on. In a new country, with few people, 
there is little rent to pay ; and the laborer gets the en- 
tire result of his labor. He takes timber when he 
wants it. He pastures his cattle in the highway, or 
on the commons ; or the use of the ground he fences 
in costs him but a trifle. 

It does not follow that people were better off. 
There is advantage in a population of a certain 
density— dense, but not too dense. Where population 
is not too large, the laborer may find the net return 
for his labor greater, after paying rent, than it was in 
an earlier day when he paid none. The dense popula- 
tion, however, introduces a class of rent receivers who 
can live without work, or if they labor, as is . more 
likely, they will have a much larger income. Distinc- 
tions are thus introduced into Society, and the laborer 
seems to have less because the others have more. The 
satisfaction of our wants depends, to a considerable ex- 
tent, on what we have as compared with others ; and it 
is undoubtedly true that one's satisfactions in life are 
actually diminished by an increase in the income of 
those about him. 



CHAPTER II. 

INTEREST— THE SHARE OF PRODUCED WEALTH. 

Labor and Natural Wealth are the only Resources 
absolutely necessary to production. In the beginning 
there were no other. Hence, Labor will receive all 
that is left after paying rent, provided it asks no as- 
sistance. The product may, however, be increased, 
sometimes a thousand-fold, by the aid of capital ; and 
the producer may find it profitable to give even a 
large share to capital, and have more left for himself. 
He seldom pays the owner of capital as much as its- 
use aids him in production. 

Capital is that part of Produced Wealth which is 
employed in production ; but all Produced Wealth — 
that which satisfies wants directly as well as indirectly 
— can obtain a share in the world's product in return 
for its use, and for the aid it renders in the satisfac- 
tion of wants. 

1. Permanent Produced Wealth. — Notice, first, 
that which satisfies wants directly, such as dwellings. 
The dwelling continually furnishes shelter day by 
day, and this is almost as desirable as food. The 
owner has this advantage over those who have no 
dwellings. He would not allow another person to use 
his house without something in return ; and one who 
is engaged in production can well afford to give part 
of the product for the use of such a dwelling, rather 

(363) 



364 DISTRIBUTION OF PRODUCED WEALTH. 

V 

than do without it. On the other hand, while one 
will erect a dwelling for his own family, he will not 
build one for others unless he expects to obtain some- 
thing for its use. 

Permanent Produced Wealth which satisfies wants 
indirectly, of which machinery is the type, vastly in- 
creases the product of labor. One man with a ma- 
chine will frequently produce as much as a hundred 
by hand. Ninety-nine per cent, of the product is 
therefore due to the machine, and only one per cent, 
to labor. If the laborer owns the machine, he is a 
hundred times better off ; if he does not own it, he 
can afford to give almost any share for its use. 

2. Consumable Produced Wealth. — The share 
which the owner of this obtains for its use is no less 
just, but the reasons for awarding it are not so appar- 
ent. The reason for interest is here the time element 
in production. A savage is obliged to supply his 
wants " from hand to mouth." He catches fish and 
kills game for the day or week, and the accumulated 
stores of food are small. Civilized production re- 
quires at least a year, and what is the producer to live 
on in the meantime? The crops are dependent on 
the seasons. One crop a year is ordinarily the rule. 
Although a suit of clothing may be made up in a 
week, this is only the last stage of the production. 
The cloth must be manufactured from wool or cot- 
ton which required a year for its growth. If the 
farmer or laborer has a year's supply on hand, he may 
depend on the sale of the product at the end of the 
year for another year's living. But suppose he has 



INTEREST. 365 

nothing. If he gets food and the necessities of life 
for his family as does the Indian, he will have but a 
miserable living. If he is free to fit the ground and 
sow a crop, he will get ten times as much at the end 
of the year. If some one has a supply and will let him 
consume it, he can afford to return as much at the 
end of the year, and something besides, perhaps twice 
as much. The farmer in this condition usually gets 
iis supplies of the country merchant, for which he 
pays " after harvest " ; and the merchant must have 
a higher price for the goods than if he were paid 
cash. Even if he sells for cash, the merchant must 
carry a stock of goods for some time in order to have 
what the people happen to want. 

The present wonderful methods of production would 
be impossible except that somebody carried a year's 
supply of consumable wealth. It is said that produc- 
tion is going on all the time ; so wheat is growing all 
the time, yet it is a year from one harvest until an- 
other. While manufacturing is a continual process, 
there are vast quantities of materials and unfinished 
goods in process of production. This reserve stock 
enables laborers to be employed to the best advantage. 
Without it, the United States could not support a 
million people. We must, then, have this stock of 
consumable goods, and we must allow the owners in- 
terest enough to induce them to accumulate it. It 
would be better if each man had enough for himself 
and family to live on for one year. He could then 
engage in production on his own account if he thought 
it more profitable than working for wages. 



366 DISTRIBUTION OF PRODUCED WEALTH. 

It is worth while here to notice a mistake of Henry 
George, who assumes that wages are paid out of the 
product, and not out of previous accumulations. The 
illustrations he uses are such as, a man going with an 
employer on a fishing cruise, his wages being paid out 
of the catch when they return. But how do the 
fishermen live in the meantime ? Why, they take 
provisions along, and they have clothing enough to 
last until they return. If the employe leaves a 
family, its members must live during his absence out 
of the stock of goods already accumulated. They 
may get goods on trust at the store. The fisherman 
may own a house. But it is plain that both the work- 
man and his family must live on goods already pro~ 
ducecl until more are produced. George, like many 
more careful writers, fails to distinguish between one's 
living and his wages. If a workman's wages are 
more than he consumes, he may receive his living out 
of the stock of goods already accumulated, and wait 
for the remainder until the production is completed. 
This is sometimes the case with the farmer's " hired 
man." The farmer furnishes his living as he goes- 
along, and lets him have what money he needs to use 
during the process of production. At the end of the 
year, when production is complete, he pays him the 
remainder of his wages. 

What Fixes the Share of Produced Wealth? 
— We are now ready to ask how much the owner of 
Produced Wealth will receive for its use. This sum 
is called interest. 

First. The interest on all forms of Produced 



INTEREST. 367 

Wealth tends to the same percentage. Something 
is usually added for risk, which may be great in one 
place and almost nothing in another. Ignorance of 
the conditions, and friction, as well as personal likes 
and dislikes, have some effect, but in the same locality 
interest on all forms of Produced Wealth tends to the 
same point. 

Let us suppose one to have a sum of money, with 
which he can buy anything, sufficient for the support 
of a number of laborers for a year. He controls the 
direction of production. He can build houses, a busi- 
ness block, a factory ; or set men to producing ma- 
chinery, or any other form of Permanent Wealth. 
Which will be produce ? Why, that for which he can 
get the largest annual return, and competition thus 
tends to make the interest on all of the investments 
equal. 

But suppose producers of consumable goods want 
this money to support their workmen ? If they offer 
him a higher rate of interest for it than he can hope to 
receive from a permanent investment, he will naturally 
let them have it. Free capital is said to flow where 
it receives the highest interest, reducing the rate in 
one line of production and increasing it in another. 
What really flows is labor. The men who have the 
means — the stocks of food and goods — on which the 
laborer must live, are able to direct that labor where 
it will pay best — now to the production of build- 
ings, now to machinery or railroads, now to the ac- 
cumulation of a larger stock of consumable goods. 
The great lines of production go on the same from 
24 



368 DISTRIBUTION OF PKODUCED WEALTH. 

, year to year. Tlie diverting of a little labor from one 
purpose to another which promises better returns suf- 
fices to even up the rate of interest in all. 

If there is an excess of any form of Permanent 
Produced Wealth, interest on it may be very low, and 
may fall to nothing, until the increase of population 
makes more demand for it, or a portion is slowly worn 
out or destroyed by time. 

The interest on both classes of capital and on all 
forms of Produced Wealth really tends to the same 
point, for the reason that so large a part of all the 
Produced Wealth in a country is consumable — certain 
to be used up in the support of the people in a year 
or so, and much of it perishable if not so used. In 
the last analysis the greater part of this Consumable 
Wealth is paid out for wages, or used for living ex- 
penses of farmers and other producers. Now, the 
enormous labor power of the country can be turned by 
wages in any direction, either to the replacement of 
the wealth consumed, or to the production of any other 
form of wealth which will pay the largest interest. 
Competition will tend to direct production to that 
form of wealth which will pay the largest interest, and 
hence to bring the interest on all the various lands of 
Produced Wealth to the same rate. 

The reader will notice that the word " tends " has 
often been used in these chapters. The actual result 
in society is almost always brought about by a com- 
bination of forces, all of which act with more or less 
friction, and some of which neutralize others. The 
simplest way is to consider one force at a time. We 



INTEREST. 369 

may be able to predict what will be its effect when 
acting alone and without friction ; but there may be 
•other forces which modify the result very materially. 
The friction is also greater in some instances than in 
others. There is no surer mark of an illogical mind 
than the supposition that some seeming exception 
overthrows a principle which we have found to be 
true by careful investigation. Interest on various 
forms of Produced Wealth, as a matter of fact, varies 
considerably. Nevertheless, it tends toward the same 
point. By errors of judgment, too much of one thing 
is produced. If it be Permanent Wealth, it may be 
a long time before the population grows up to it, or it 
wears out. Returns are often higher to one kind of 
Produced Wealth because others do not know how 
high they are, or fear the risk of the investment, 
when the owner alone knows it to be safe. These, 
and many other influences, cause considerable ap- 
parent variation in the rate of interest. Neverthe- 
less, when taxes, compensations for risk, and the share 
of profit, are deducted, we shall find that the rate of 
interest in the same locality varies much less on the 
various forms of Produced Wealth than we might 
•suppose. 

Second. Not only does competition tend to reduce 
the rate of interest on all forms of Produced Wealth 
to the same rate, but it also determines the average 
rate of interest, as considered apart from the risk in- 
volved in lending. The rate of interest must be high 
enough to induce somebody to save a year's supply 
for the people, and to accumulate machinery, and 



370 DISTRIBUTION OF PRODUCED WEALTH. 

other Permanent Wealth, or wants can not be satis- 
fied in the present economical way. If interest rules 
too low, the reserve supply for the world's support 
will be endangered ; if too high, competition will 
bring it down. 

A high rate of interest is a great inducement to 
saving. A farmer knows that a ditch would increase 
the product of a field fifty per cent. He has not the 
time to dig it, but the inducement to work more 
hours, or to save money to hire it dug, is strong. A 
workman is paying $200 a year for a little house 
which he could build for $500, and he is likely to 
deny himself, and save money to get a home of his 
own. A manufacturer sees that a new machine would 
increase his profits fifty per cent, of its cost. The 
machine would pay for itself in two years. If he 
can not borrow the money, he will make every effort 
to save it. If one can rent a house for four per cent, 
of its cost, there is less inducement to build one ; and 
if a manufacturer can borrow money at four per cent.,, 
he will not make the effort to save that he made when 
he was paying fifty. So, if one can lend money at 
three per cent, a month, he will deny himself, and 
save to lend, since a very moderate fortune will give 
him an income on which he can live. When he can 
get only four per cent, a year, the inducement to save 
is less strong. More people are, therefore, saAdng 
where interest is high, and numerous small fortunes 
are accumulated. If interest were fifty per cent., it 
is probable that a very large part of the people would 
scrimp themselves in living, in order to save a year's- 



INTEREST. 371 

supply of the necessities of life, and avoid the pay- 
ment of interest to others. As interest becomes 
lower, few people are willing to save, and the ma- 
jority will consume all they receive. Yet experience 
has shown that a few will continue to save all of this 
sort of wealth which the world needs, if they can 
gain even five or six per cent, for its use — an in- 
significant sum compared with the advantage which 
the world gains. It is because interest is so low that 
laborers do not save more. 

It is undoubtedly true that there would be a certain 
amount of saving even if there were no interest. 
Men wish to lay by for a rainy day. But it would be 
very little. Interest, in the economic sense, is not 
merely the sum paid for the use of money, but the re- 
turn to the owner from any form of Produced 
Wealth. This would mean that when one built a 
house he could get for its use only what the annual 
repairs cost, and a sum which would replace the build- 
ing when it is destroyed by time. It would be safer 
to bury his gold in the earth. What would be the in- 
ducement to make machinery if one hoped to get back 
only the cost of the machine when it is worn out? It 
is true that the desire to accumulate a hoard of 
wealth for future needs, or for posterity, would lead to 
considerable saving, especially by the wealthy, and the 
saving might take the form of machinery and build- 
ings ; but we can hardly imagine that such saving 
would be sufficient to keep the world going. The 
stock of Produced Wealth would diminish, and wants 
would be satisfied at far greater cost of labor. 



372 DISTRIBUTION OF PRODUCED WEALTH. 

How high a rate of interest is necessary to maintain 
the existing stock of wealth, depends on the character 
of the people, their progress in civilization, and the 
relative amount of wealth in the country. The ac- 
cumulation of a great reserve requires time, and is in 
the beginning a slow process. Because interest rules, 
for a few years in a new country, at twenty per cent., 
it does not follow that this rate is necessary to induce 
people to save ; but they have not had time to save 
the capital needed. Produced Wealth is worth this 
high interest to use, and there is so little to lend that 
there is no competition among the lenders. Wait un- 
til time has been given for accumulation. In Eng- 
land, Holland, and the United States, interest, exclu- 
sive of taxes and risk, has fallen as low as two per 
cent. 

The annual share of Produced Wealth is compara- 
tively a small one, and the share of that portion which 
is used in production, called capital, is smaller still. 
If we roughly assume that the manufactured products 
each year equal in value the capital invested, the pro- 
ducers will pay to capital interest on the investment, 
say six per cent. ; which would be six per cent of the 
product, since we assume the product equals the capi- 
tal employed. Certainly laborers have, no reason to 
complain if capital receives six or ten cents out of 
every dollar's worth of goods produced in mills where 
one man turns out a hundred times as much as he 
could by hand. It is not expected that capital will 
receive anything like what it contributes to produc- 
tion. 



INTEREST. 373 

In concluding this chapter it must not be forgotten 
that the sum paid for the use of a building includes 
both rent for the ground, and interest on the value of 
the improvements ; also that a large portion of Per- 
manent Produced Wealth is used by the owners, who 
do not pay interest to others. Its possession contrib- 
utes to production or to the satisfaction of their 
wants directly, and this benefit is a part of the share 
of Produced Wealth. 

The share of Produced Wealth is called interest, 
and the rate of interest is determined by competition. 
It tends to that point which will induce people to ac- 
cumulate enough Produced Wealth to enable the 
world's production to be carried on with the greatest 
economy. If interest is too high, it is a spur to ac- 
cumulation. If it is too low, the increase of Pro- 
duced Wealth goes forward less rapidly than it would 
otherwise. 

Put in another way, the average rate of interest is 
determined by what additional Produced Wealth is 
worth to use. When it is relatively abundant, addi- 
tional wealth is of little value. If we have all the 
cotton factories needed to supply the wants of the 
people, an additional factory would have no value in, 
use, and would pay a very low rate of interest on 
the investment. As new machines are invented, or as; 
we discover new methods in which Produced Wealth 
can be made to yield a return, interest tends to rise. 
The combined result of all tendencies, to-day, is 
toward the lowering of the rate of interest. The 
average rate may yet sink to two per cent. 



374 DISTRIBUTION OF PRODUCED WEALTH. 

Interest is usually reckoned as though it were on 
money. But the real things that the manufacturer 
wants are not money, but labor, machinery, etc. 
What the laborers want is food, clothing and other 
comforts and luxuries of life. Money is only a con- 
venient way of estimating the relative value of all 
these things and keeping the accounts. In the last 
analysis it is goods, dwellings — real things. We 
have, therefore, considered the substance and not the 
shadow. We are much more likely to get at the truth 
by dealing with real things, the things that satisfy 
wants, than by suffering ourselves to be confused by 
the idea that it is money we are seeking for. The 
return from all forms of Produced Wealth is interest. 
Even the satisfaction the owner gets from a costly 
painting is supposed to equal the average rate of in- 
terest on its value -, else he would sell it, and invest 
money in something else. 



CHAPTEK III. 

THE SHAKE OF GOOD NAME AND ESTABLISHED 

BUSINESS. 

A " good name " and an established business are 
usually classed with capital, but they are not Pro- 
duced Wealth, because all wealth is material. Here 
we see the advantage of looking at things as they 
are. When we talk of Produced Wealth there is no 
danger of failing to understand precisely what the 
term covers, and the division is a natural one. 

A " good name " and established business are fre- 
quently the result of great labor, and., are often of 
great advantage to the world as well as to the owner. 
In any case the owner is entitled to the benefit they 
confer upon him. One's name is a part of himself, 
and the good name of a business is a guarantee of its 
character which saves others trouble of investigation 
and risk of loss. 

Suppose one is engaged in the production of shoes. 
He can wear very few of them. The rest are worth 
only what he can get for them. The satisfaction of 
his wants will depend on Exchange, on how much 
money he can get for the shoes, and how much he can 
buy with the money. / Now, when two factories make] 
shoes equally good, why is it that one will receive a 
higher price for his goods than another? Leaving 
out differences in the ability of the salesmen, the 

(375) 



376 DISTRIBUTION OF PRODUCED WEALTH. 

higher price comes from the reputation, or the good 
name of the shoes. There are two brands of soap on 
the market which have for years enjoyed a large sale. 
It is said that soap equal in every respect to either can 
easily be made. But can it be sold? Not at the 
same price except by increased cost of selling. These 
soaps are known. They have a good name. A great- 
many people have used them, and know them to pos- 
sess certain qualities, and have been led to believe 
they possess other qualities which can not be so 
r ea dily ascertained. 

No one not an expert is a judge of all goods from 
their appearance. He must buy largely on the repu- 
tation of the maker or the seller. If he has bought 
something of a certain brand and found it to be good, 
he feels safe in buying another article of the same 
make. Another manufacturer may make precisely 
the same goods, or those equal to them, yet the pur- 
chaser does not know that they are as good ; and can 
tell only by purchasing and using. Consequently, he 
will pay a little more for the well-known goods than 
for those he knows nothing about. If the price be 
the same, he is more likely to choose those he knows. 

One unfamiliar with the complications of modern 
business, can have only a faint idea of the enormous 
advantage this gives the well-known maker. It may 
prevent another from doing business at all. The only 
way in which the new manufacturer can compete with 
him who has a good name established, is by making 
a name for himself. Perhaps he attempts to do it by 
advertising, in which he must spend large sums. Per- 



THE SHARE OF GOOD NAME. 377 

haps he does it by allowing the retailer larger profits. 
Perhaps he sends men about the country to explain 
the merits of his goods to merchants who will explain 
them to others ; or, as for example in the early sew- 
ing-machine trade, he sends men to the customer, 
direct, to explain the merits of his goods. The 
manufacturer whose goods are well known may do- 
all these things in order to maintain his reputation, 
but nevertheless he has a great advantage over the 
other. If the reputation of his goods gives him a 
large trade, this may enable him to manufacture 
cheaper ; and thus, though he sells at the same 
price as his competitor, he may gain larger profits. 
We have seen the advantage of the division and re- 
combination of labor, and of manufacturing on a 
large scale. This great gain to the world from the 
increased efficiency of labor may be absorbed by the 
large manufacturer on account of his good name. 
The reputation of his goods enables him to do a 
large business, by means of which he can manufac- 
ture cheaper, and sell at the same price as those who 
do a small business. The reputation of his goods 
may also enable him to get a slightly increased price, 
which, in his large manufacturing, may mean great 
profits. One cent from each of the inhabitants of 
the United States would mean $600,000.00, and 
while no person can deal with every one of this great 
population, he may deal with vast numbers of them ; 
and a few cents additional from each may mean a 
great fortune annually. All this is the result of his 
reputation and good name. Numerous instances could 



378 DISTRIBUTION OF PRODUCED WEALTH. 

be cited where the good name of an article or business 
could not be purchased for a million dollars. This 
good name may have cost the owner all or more 
than it is worth to him, or it may have cost less, or 
be the result of accident ; its advantage is the same 
in any case. The reputation of some goods has been 
made by expending vast sums in advertising. This 
advertising may have cost all the reputation is worth. 
Sometimes reputations have been built up by dis- 
tributing samples of the goods free, and thus induc- 
ing the people to use them and ascertain their merits. 
More often it has been made by the slow process of 
selling as one can, and trusting to the quality of the 
goods to make their own reputation ; and their good 
name may represent years of patient industry and 
effort. 

However it may have been obtained, a good name 
is of great value to any producer, and enables him to 
take a share of the product ; sometimes a very large 
share ; often a much larger share than interest. His 
competitor must either sell cheaper, or sell less, or 
expend great sums in convincing the people that his 
goods are equal to the other. This share of a good 
name is a species of monopoly. There are good and 
bad monopolies, which will be considered in the next 
chapter. 

Under the head of " good name " may, for conveni- 
ence, be included the business terms "good will," and 
" business," since they all follow the same law, and 
are economically part of the same share. The words 
" business," " name," and " good will," frequently 
occurring in sales of property, are parts of one thing. 



THE SHARE OF GOOD NAME. 379 

The prospect of receiving this share is frequently 
sold, or " capitalized," and is considered worth a sum 
which if put at interest would yield the same annual 
return. That is, if the "good name" of a business 
is worth $80 a year, and the rate of interest is taken 
at eight per cent., the " good name " is capitalized at 
$1,000. A large soap factory was recently sold for 
something over six million dollars. It is not likely 
that the plant cost half that sum. The rest was in 
the " good name." In this case the " good name " 
had been gained partly by advertising, and had cost 
fabulous sums. But the business had the " good 
name," whether it cost more or less than it was 
worth. The new company, by keeping up the 
quality of the goods, was almost certain of the share 
which came from the "good name" of the article. 

We are to remember that when " good name " is 
thus capitalized, it is not Produced Wealth. Wealth 
is always a material substance, and we have been at 
great pains to use the term Produced Wealth in place 
of the indefinite*' one of " capital " where there was 
danger of misunderstanding. It is best to look at 
things as they are. Produced Wealth, material sub- 
stance, is one thing ; the prospect of getting a share 
of future production on account of the good name of 
a product or an established business, is another. They 
should never be confused. The one is the share of 
the Resources Produced by Industry ; the other is the 
share of "good name." The nature of the share is 
not changed because some persons estimate it in terms 
of a principal sum which would bring as much if 
placed at interest. 



380 DISTRIBUTION OF PRODUCED WEALTH. 

The share of " good name " is sometimes included 
in the share of profits, and sometimes in that of inter- 
est ; it should be included in neither. It is a share by 
itself. In an ordinary business which one has built 
up for himself, he thinks of the share of "good name" 
as a part of profits. He pays rent, and interest, and 
other expenses, and lumps the share of " good name " 
in with his own services and compensation for risk. 
In many lines of business one can not practically do 
otherwise. He makes more than his neighbor ; and 
perhaps flatters himself that the result is due to his 
superior business management. In reality, his larger 
gross profit is in consequence of the good name of 
his goods, or his own reputation. Since this "good 
name" is probably the result of his own business ef- 
forts, there is perhaps no reason why it should not be 
classed with profits, as compensation for his past ef- 
forts. 

When " good name " is " capitalized," the share 
is wrongly credited to interest. Let us suppose a 
soap factory which is sold to a company at a capitali- 
zation. In addition to the present value of the plant 
— what it would cost to replace it by a new one as 
well adapted to the purpose — a considerable sum is 
added for the value of the "good name" and "busi- 
ness." The new company is expected to pay divi- 
dends on the entire stock, that which represents the 
value of the plant as well as that which represents 
the capitalization of the " good name." Here the 
share of the "good name " is called interest. Wher- 
ever a " good name " and business is thus capitalized, 



THE SHAKE OF GOOD NAME. 381 

its share is included under interest. It should be sep- 
arated. 

The share of " good name " is, however, very close- 
ly related to that of Produced Wealth, and in all 
stock companies is classed as capital. It may have 
cost as much as the plant ; and the stockholders 
should have interest on it. In the one case, labor has 
been expended in building a factory and making ma- 
chinery ; in the other, labor has been expended in 
making a good name for the goods, and arranging 
with others for their sale. The labor would never 
Iiave been expended except for the hope of reward. 
One can not make enough in one year from the good 
name to pay what it has cost, but he, or his succes- 
sors, may make the interest on what it has cost, for- 
ever. In this case " good name " is as justly entitled 
to a share as Produced Wealth. 

Property in "good name," "business" and "good 
will " should always be distinguished from property 
in material wealth. 



CHAPTER IV. 

THE SHAKE OF MONOPOLY. 

The price at which goods can be sold under mo- 
nopoly was necessarily considered under exchange. 
Whatever is obtained in addition to the natural price 
under competition, is due to monopoly. 

There is monopoly in production as well as in ex- 
change. One may be the only producer in his line, 
and be able to prevent others from engaging in the 
manufacture of his class of goods. The share of the 
world's productions which he will thus be able to 
obtain will be gained through exchange, in a higher 
price for his goods than he would otherwise receive. 
This higher price, in the end, comes out of the con- 
sumer, who is probably engaged in some other form 
of production. 

Natural Monopolies. — The monopolies most im- 
portant to consider at present are what have come to 
be known as Natural Monopolies. By this term we 
do not mean the monopoly of natural talent, to which 
every one is entitled of right. We mean necessary 
monopolies — necessary because, in the nature of the 
case, there can be no real competition ; necessary, be- 
cause the service can be so much more cheaply per- 
formed by one company than by two that it is practi- 
cally necessary to give it into the hands of one. In 
the case of these monopolies we must abandon the idea 
(382) 



THE SHARE OF MONOPOLY. 383 

of competition, because it logically leads to combina- 
tion and higher prices. The term, Natural Monopoly, 
is now fixed and generally understood in this sense. 
It would be useless to attempt to change it. 

There are certain services, required by the larger 
portion of the people, which can be done on a large 
scale so much cheaper than on a small one, that they 
are certain to be gathered into the hands of one com- 
pany. Competition can not act because the small con- 
cern can not, in the nature of the employment, com- 
pete with the large one. Such is the supplying of 
water to cities. Not every person, but a large portion 
of the people, desire water furnished through a system 
of pipes. In a crowded city, it is necessary to require 
its use by all, for the health of all. If several com- 
panies attempt to supply the city, it necessitates sev- 
eral systems of pipes, each costing nearly as much as 
one which could serve all equally well. If the com- 
panies divide the city into districts, each laying its 
pipes in that district alone, then each of such districts 
has a monopoly ; since there can be no competition 
with companies whose pipes do not reach that terri- 
tory. Hence, rival water and gas companies usually 
fight until one destroys the other, at a great waste ; or 
they combine, openly or secretly. 

The most important necessary monopolies are : in 
the cities, water, gas, electric light, street-car lines ; in 
the nation, the post-office, telegraph, express business, 
and railroads. 

Doubtless there are many other lines of business in 
which a monopoly can do the work somewhat cheaper 
25 



384 DISTRIBUTION OF PRODUCED WEALTH. 

than competition, but the advantage is not sufficient 
to make a monopoly certain. It is not true that the 
grocery business can be carried on very much cheaper 
in large than in small establishments. There will al- 
ways be competition in this business, without govern- 
ment interference. When competition acts, it can 
usually be trusted to give low prices. The old praise 
of competition was not as an end, but because it was 
believed that it was the best means of securing fair 
prices. When in the nature of the case it can not 
act, as with Natural Monopolies, some other means of 
regulating prices must be found ; and there are many 
who see no method save in government control. 

The share of the world's productions which one will 
be able to obtain on account of a complete or partial 
monopoly, depends on the principles set forth in con- 
sidering monopoly as affecting Exchange. One of 
i;he most important of these is the principle that 
the price which the monopolist can fix will depend, in 
the first place, on whether he is compelled to perforin 
the same service to all persons on the same terms, or 
whether he is permitted to charge different prices to 
different people. In the former case, he can obtain 
-only the value in use to those to whom his services are 
worth least ; in the latter, he can obtain the full value 
in use from every person with whom he deals. This 
statement is so important as to bear repetition ; and it 
is one which has usually been overlooked by political 
economists. In other lines of production competition 
requires all goods to be sold at something like the 
same price. A good illustration is a railroad which 



THE SHARE OF MONOPOLY. 385 

has a monopoly of transportation at a certain point. 
It can charge different shippers different prices for the 
same service. It will, therefore, seek to get as near 
the value in use to each one as it can. If it is con- 
vinced that one person can not afford to pay more — 
that is, that he will not ship, or will go out of the 
business which necessitates shipping at the established 
rates — it will give him a reduction ; seeking to get 
from every person as much as he can afford to pay, or 
the value in use. Here is, certainly, a proper field 
for legislation, which Congress has entered within the 
last few years, against great opposition. The princi- 
ple is that the Monopoly must sell to all at the same 
price ; that it must perform like services for different 
persons at the same rate, and that when such services 
vary, the rate shall not vary in undue proportion. 

A monopolist frequently meets with competition at 
some one point. Rather than lose the profit to be 
made here, he may sell the goods as low as he can 
afford. If now he can be compelled to sell every- 
where at the same price, his power to obtain excessive 
prices is partly or completely destroyed. Again the 
best illustration is a railway. At railway centers rates 
are low, perhaps too low, because of competing lines. 
But every road passes through many towns in which 
there is no other road ; and here it can charge monop- 
oly prices, which are " what the traffic will bear." 
If, now, the road is compelled to give the same or 
similar rates to all the towns on the line that it gives 
to railway centers, the benefit of competition is ex- 
tended to every station on the line. If it gives low 



386 DISTRIBUTION OF PRODUCED WEALTH. 

rates anywhere, it must give them everywhere. If 
the competing roads at railway centers find rates are 
too low, they must raise them ; but they must not 
compel other stations to make up what is lost at a 
railway center. Competition at the railway centers is 
pretty certain to make rates low enough ; and the ex- 
tension of these rates to every station on the line 
would change many railways from monopolies to com- 
petitive business. 

This principle is the foundation for the famous 
" long and short haul clause," of the Interstate Com- 
merce law. This clause provides that a road shall not 
make a greater charge for a less distance in the same 
direction, and has met the chief attack of railroad 
managers. Yet no juste r measure could be devised. 
There may, indeed, be cases in which it actually costs 
the road more to leave a car fifty miles short of its 
terminal than to carry it through, but not very much 
more. Now, the principle of the law is, as near as 
possible, the same price to all for the same service ; 
by which a road is compelled to fix uniform rates for 
those who, in their distress, or from lack of competi- 
tion, might be compelled to pay any price the road 
chose to ask. It is thus intended to carry the benefit 
of competition at terminal points to every one who 
does business with the company. It is true this may 
cause a raising of rates at competing points ; but it is 
more important that every one have an equal chance, 
with one price to all, than that rates should be low to 
anybody. The Interstate Commerce law is a question 
of practical statesmanship ; and while it has not ac- 



THE SHARE OF MONOPOLY. 387 

"Complislied all that might be desired, its principles are 
steps in the right direction for the control of monop- 
oly. It is introduced here only for the purpose of 
• illustration, and not for complete discussion. 

Most Natural Monopolies may properly be placed 
nnder government control. Such control may be 
either by government ownership, or by legislation pre- 
scribing under what conditions the monopolies may be 
carried on by private parties. Either course appar- 
ently narrows somewhat the sphere of private enter- 
prise ; but such monopolies would otherwise be con- 
ducted by great corporations, with the management in 
the hands of a few officers, and the number of people 
who would thus be prevented from managing a busi- 
ness of their own is insignificant. Every business 
which is of the nature of a natural monopoly has 
been owned and controlled by government in some 
civilized country. In the United States, the post- 
office has always been regarded as better in the hands 
of the government than in those of private parties. 
There is no necessity for rival post-offices in the same 
town. The business is much more economically man- 
aged under one system. No private corporation would 
have given us our present magnificent postal system. 
The government has regard for the interests of all the 
people, to the extent of making a uniform rate for all 
parts of the United States ; and, although there is 
considerable difference in the cost of carrying a let- 
ter from Boston to ,New York or to San Francisco, 
and a still greater increase in the cost of carriage to 
out-of-the-way places, the encouragement to communi- 



388 DISTRIBUTION OF PRODUCED WEALTH. 

cation, and the desire to make the country a more de- 
sirable place of residence, are arguments which justify 
a government in charging something more than cost 
in the one case, and something less in the other. The 
difference is more apparent than real, because a uni- 
form rate enables the entire service to be carried on 
much cheaper. Concerning the control of this most 
important Natural Monopoly by government owner- 
ship, there is no question anywhere. 

Railroads are frequently owned by the government 
in European states. In Austria the country has been, 
divided into zones, and a uniform rate made for each 
zone without regard to distance, something on the 
principle by which letters are carried in the United 
States. The uniform rates, of course, simplify the 
business, so that the cost of carriage is less. The 
railroad service is not a complete Natural Monopoly, 
since there will always be considerable competition at 
large cities ; but it is practically so at local stations, 
and any government would undoubtedly be justified in 
undertaking the management of all the railroads in its 
territory, if no other means of control can he found. 
The magnitude of the task in the United States 
should make this course a last resort. It would be 
far more difficult with us than in England, on account 
of the condition of our Civil Service. It would be in- 
tolerable that the vast number of railway employes 
should be at the mercy of a political party, and so 
many places regarded as the spoils of an election. If 
men were appointed, as in England, on the merit sys- 
tem, wholly without regard to politics, the task would 



THE SHARE OF MONOPOLY. 389 ; 

be easier ; but, even then, it is one we may well shrink 
from. 

The second means of control of a Natural Monop- 
oly is by prescribing the conditions under which it 
may be carried on. The State may even require that 
certain things be done for the good of the whole coun- 
try, although a railroad may be compelled to charge 
more than cost of carriage in some instances to make 
up the loss. For example, it is greatly to the interest 
of the United States to build up the smaller towns, 
and to prevent the massing of dense populations in 
cities. We may, therefore, require a railroad to per- 
form the same service for all persons at the same 
price, to give a small town the same rates as a larger 
one for the same distance, and to make the same price 
to him who ships a single car as to him who ships a 
dozen. The road can make its average rates high 
enough to cover the cost. The solution of the rail- 
road question is likely to be found in the principle 
that roads must perform like services for all persons- 
on the same terms; and must not give lower rates 
to either large cities or large shippers. The entire 
traffic of the road will thus be regulated by the rates 
at railroad centers, where competition will be likely to 
keep them within reasonable limits. The courts of 
some States have gone further, and ruled that rates 
must be reasonable. What is reasonable is, of course, 
a question of fact for a jury. This legislation is based 
on the old common law for common carriers ; but the 
economic principle for its justification is found in the 
fact of the Natural Monopoly, which practically pre- 



390 DISTRIBUTION OF PRODUCED WEALTH. 

vents competition from regulating rates at all points, 
and to all persons. There is competition enough at 
some points ; but for the greater part of its stations, 
the road has a Natural Monopoly. The tendency is 
also toward consolidation, and while competition exists 
at railroad centers, at present, all roads may at some 
time in the future form parts of one great system. 
If so, the Natural Monopoly would be complete. 

If it be asked why similar regulations should not 
Ibe made in all lines of business, the obvious reply 
is, that outside of monopolies competition is a suffi- 
cient regulator of prices, and that such regulation 
might destroy the business. If the law compels a 
Natural Monopoly to perform some service for less 
than cost, that all citizens may have an equal chance, 
the very fact that the monopoly is without competition 
enables it to fix its average rate high enough to cover 
such loss. We do, however, make other regulations 
for various lines of business when the public interest 
demands it. 

In the United States, the post-office and the rail- 
roads may be said to be at the two extremes of Nat- 
ural Monopolies. The first we are controlling by 
government ownership; the other we are attempt- 
ing to control by such regulations as the Interstate 
Commerce law. Between these two lie water-works 
and gas-works for cities, street-car lines, the express 
business, the telegraph, etc. It is now pretty gener- 
ally agreed that water-works are best under city man- 
agement. A few cities have recently built their own 
gas-works. In others, legislation practically fixes the 



THE SHARE OF MONOPOLY. 391 

price of gas. The last is an unsafe plan; there is 
clanger of practical confiscation of the property on the 
one hand, and of allowing enormous margins for 
profit on the other — profits which no man could make 
in a business influenced by real competition. Street- 
car lines are controlled in most cities by roughly fix- 
ing the fare at five cents ; a convenient sum to handle, 
but one which gives great opportunity for profit or 
loss. There is yet considerable competition among 
telegraph lines, but they are a Natural Monopoly 
which could be carried on much cheaper under one 
management. There has, on this account, been a 
strong demand for a postal telegraph, which means 
government ownership. 

Government Control of Natural Monopolies 
not Socialism. — It is probably good statesmanship 
to bring all Natural Monopolies under government 
control, but government control does not require gov- 
ernment ownership or management. The Interstate 
Commerce law brings the railroads to a considerable 
extent under government control. It would be possi- 
ble to leave them in the hands of private owners, and 
at the same time secure fair rates of charges. The 
essential thing about fair rates is not so much low 
charges as equality, so that no person or corporation 
can secure an improper advantage over another. We 
may require railroads to do business in a certain way 
for the good of the people ; but beyond necessary reg- 
ulations, they should be free to manage their business 
as they please. We may say, We expect you to 
make a reasonable profit ; but you must make it in 



392 DISTRIBUTION OF PRODUCED WEALTH. 

certain ways, and yon must not make it by methods- 
contrary to the good of the whole people. In return 
for this limitation, the government is able to protect 
different companies from the effects of their own 
natural competition, where it would be destructive,, 
either to the roads or to reasonable profits. 

This is not Socialism, which would destroy every 
one's power to engage in business for himself. It 
takes only a limited number of lines of business out 
of the hands of private control ; and those lines are 
certain to go into the hands of some monopoly, any 
way. If a business is of such a nature that it must 
be controlled by a monopoly, most people will prefer 
that that monopoly be the government. Individual- 
ism does not prevent the formation of partnerships. 
When a city is to be supplied with water, it does not 
destroy Individualism for the people to engage in a 
partnership to furnish themselves with water. Indi- 
vidualism only demands that all lines of business 
which are adapted to private management shall be re- 
served for private enterprise. Government ownership 
of railways may be very objectionable, but such own- 
ership is not Socialism, nor a step toward Socialism. 
A railway employe would have the same liberty in the 
service of the government as in the service of a great 
corporation. The equalizing of rates would give op- 
portunity for many small lines of business where the 
production is now in the hands of a monopoly. Gov- 
ernment ownership of railways would probably tend to 
an increased number of independent producers. The- 
objections to it are the necessary extension of govern- 



THE SHARE OF MONOPOLY. 39S 

mental powers, the vast increase in the number of 
offices to become the spoils of every political election, 
and the opportunities for swindling the government 
which it would afford. Government ownership is 
common in Europe, and is a question of practical 
statesmanship ; but the American people hope to find 
a better way of securing just and equal rates for all. 

The price at which any monopoly can sell its goods 
depends on the principles set forth in the chapter on 
"Monopoly," in the book on "Exchange." A part of 
this price — usually the greater part, and frequently 
nearly the whole of it — is what would be obtained 
under competition. The excess, only, is the share of 
Monopoly. But while the percentage of the price 
which is due to monopoly may be very small, the ag- 
gregate share of a monopoly is frequently very large. 

A recent form of monopoly is known as the Trust, 
which is simply a combination of men who would 
naturally be competitors. The prices which they can 
obtain for their goods are shown under " Combina- 
tion," in the book on Exchange. All that is obtained 
over the natural price under competition, is the share 
of Monopoly. 

Capitalization. — Monopolies are sometimes capi- 
talized, though not so frequently as " good name." 
Some forms of monopoly are not so certain to return 
a future income. When a patent right is sold, the 
monopoly is capitalized, but as it is expected to expire 
in a few years, the capitalization must be such as is 
expected to pay, not only interest, but the principal, 
within the time the right has to run. To a certain 



394 DISTRIBUTION OF PRODUCED WEALTH. 

extent, this is true of all capitalization. If one lias a 
monopoly of any kind of production, or any service 
which he can transfer, it can, of course, be capital- 
ized and sold. 

The truth that must not be forgotten is, that such 
capitalization is not material wealth. It does not 
come under the head of "Resources Produced by 
Human Industry," which are always material. Such 
capitalization represents only one's right to a share of 
the world's production, or perhaps only his power to 
take a share. It does not increase the resources for 
the satisfaction of wants. The apparent wealth of the 
country is often vastly augmented by the mere draw- 
ing of certain papers, but there is no more real wealth 
than before. One may be making great profits out 
of a soap factory, by reason of its " good name " and 
monopolies secured by letters patent and otherwise. 
Now, to call the " good name " and monopoly of this 
factory worth a million dollars, does not increase the 
wealth of the country. If we call it capital, then 
capital is not always material wealth. It was for this 
reason that we treated of the " Share of Produced 
Wealth," hi a former chapter; and did not treat of a 
share of Capital. Capital is too indefinite for our 
purposes. By " Produced Wealth," or the " Re- 
sources Produced by Industry," we know what we 
mean. 

We do not always separate the share of Monopoly 
from the other shares which may fall to the same in- 
dividual or company ; and the share of Monopoly is 
not found in the product, as it comes from a factory, 



THE SHARE OF MONOPOLY. 395 

but in its exchange for other things. Of the money 
(representing a share in all the world's products) 
which the monopolist receives in exchange for his prod- 
uct or service, a considerable part represents rent ; an- 
other portion is the share of interest ; the largest 
amount, probably, represents labor, or wages paid for 
labor ; and another share, the profits of business man- 
agement. The share which comes to one on account 
of monopoly is clear gain ; it is so much more than 
other men can make in the same line of business. 

There are good and bad, just and unjust, monopo- 
lies. The monopoly of personal talent is the highest 
right in the world ; it is the right of the laborer to 
the result of his own labor. Nobody begrudges 
Joseph Jefferson the income he receives from his mo- 
nopoly of playing Rip Van Winkle as no other living 
being can play it. No one is compelled to see him ; 
and the actor can honestly make the price of witness- 
ing the performance as high as he pleases. The mo- 
nopoly of " good name " is not only the right of the 
possessor, but is in the highest degree conducive to 
the interests of the people. It encourages honest 
goods. The producer is anxious to make a name 
which will lead people to buy of him again. If all 
men were honest, and the stamp on any piece of goods 
a guarantee that they are precisely as described, 
a good name would be worth less than now, because 
more common. The share of the world's produce 
which it pays for the good name of certain goods, is 
partly a penalty for the unreliability of dealers. It 
is the cost of protection against the swindlers and the 
incompetent. 



396 DISTRIBUTION OF PRODUCED WEALTH. 

The share of Natural Monopolies is a very large 
one ; not because they are numerous, but because they 
serve so many people, and take something from each 
one. Frequently, the sum they draw is much larger 
than that of all others combined, except the share of 
labor. Next to the rise in value of land, they are the 
chief means by which large fortunes have been accu- 
mulated. 



CHAPTER V. 

THE SHAKE OF THE PRODUCER — PROFITS OF PRO- 
DUCTION. 

We now come to the great share of economic labor. 
Rent must be paid. Interest on Produced Wealth 
used in production is justly due, and must be paid if 
the stock of Produced Wealth is to be kept up, and 
production is to be carried on economically. The 
owner of a good name will be able to obtain a larger 
share of the world's goods in exchange for the goods 
he makes on account of it ; and is justly entitled to 
this share. The monopolist can always take a share, 
larger or smaller, on account of his monopoly ; and is 
often justly entitled to it. Usually, however, we seek 
to reduce this share ; but it is frequently impossible to 
do away with it, without destroying the right of prop- 
erty, and losing more than we would gain. Methods 
•of reducing it, and abolishing it in some cases, have 
already been considered. 

After these shares are taken, all else belongs to La- 
bor. But it is to be remembered that we are using the 
word " labor " in the economic sense, not in the popu- 
lar sense of "workingman." It includes every effort 
of mind or hand for the satisfaction of wants. The 
classes of laborers in this sense are so many, and so 
widely separated, that it does not help us much to say, 
as did some of the older economists, " so much be- 

(397/ 



398 DISTRIBUTION OF PRODUCED WEALTH. 

longs to the laborer." In this and the following 1 
chapters we shall, therefore, study the shares of the 
various classes of laborers. It will be necessary to use 
the term " laborer " sometimes in the economic sense, 
and sometimes in the narrower popular meaning ; but 
the connection will be such that the reader can not 
misunderstand. 

After paying rent and interest, the shares of land, 
Produced Wealth, good name and Monopoly, all else 
belongs to the Producer, to him who engages in pro- 
duction, taking its risks for the sake of its profits. If 
the manual laborers themselves engage in business en- 
terprise, as in a co-operative factory, they are the pro- 
ducers and this share is theirs. The farmer usually 
owns his land and stock, and carries on business for 
himself ; hence the entire product belongs to him. If 
he is a " renter," he pays rent for the land, and prob- 
ably interest ; and the remainder of the product is 
his. If he works the land " on shares," he may give 
as much as a third of the product for rent. 

When the undertaker of any busmess employs men, 
paying wages for their labor, he steps into their place, 
succeeds to their rights, and has labor's share of the 
product. The ownership by each man of himself, and 
his right to his own labor, implies the right to sell 
that labor as well as to carry on production on his own 
account. Often he can get more for his labor than 
he could produce ; and there is no difference in prin- 
ciple between selling his labor and the product of his 
labor. A shoemaker in a small shop makes and sells 
shoes ; the shoemaker in a large factory sells his labor 



THE SHAKE OF THE PRODUCER. 399 

to be employed in making shoes, because lie can get 
more for his labor than he could for all the shoes he 
could make by himself. Said a Socialist, " That 
building belongs to the workmen who built it." Said 
a man in the crowd, " I laid brick on that building 
for four dollars a day, and the building belongs to the 
man who paid me the four dollars." Certainly ; what 
else did he pay him the four dollars for ? If the work- 
man wanted to put up a building for himself, who 
would hinder? But what idiot would pay four dol- 
lars a day for nothing? 

The man who pays the wages concentrates in him- 
self all the risk, and all the chance of gain of per- 
haps a hundred laborers. He must sell the product 
under the laws of Exchange ; and many men are com- 
pelled to sell it for less than they have paid in rent, 
interest and wages. If this loss or profit were divided 
among the hundred laborers, it might be only a small 
percentage on the yearly wages of each one ; but 
when it is concentrated into single hands, and falls on 
one person, the loss or profit may be very large. The 
taking of such risk seems necessary. It is not gam- 
bling, though the chances are sometimes as great as in 
gambling. It is legitimate and honest business, con- 
ducted for the good of the nation. When one en- 
gages in business, he must take the chances of a good 
many things he can not control, as well as of his own 
ability in management. A very little variation may 
make the difference between bankruptcy or a fortune. 
Co-operation is the only way of avoiding the throwing 
of this risk on a very few persons, and co-operation 
26 



400 DISTRIBUTION OF PRODUCED WEALTH. 

lias not yet demonstrated its practicability. It is easy 
enough for one to divide his profits, when he makes 
any, among his employes, but no one will consent to 
share his losses ; and no one can afford to take risk 
without the chances of profit. 

By the Producer, we understand the one who under- 
takes the production of goods, succeeding to the share 
of all laborers to whom he pays wages. It is not easy 
to find a good name for him. In French he could be 
called the entrepreneur. Prof. Francis A. Walker 
suggested that he could naturally be called the " un- 
dertaker " were this word not now used in the sense of 
funeral director. The word " undertaker " may yet 
come into use to signify the one who undertakes any 
business on his own account, taking its risks, being 
responsible for it, and having its control with all loss 
or profit after paying rent and interest, and other 
shares. He has here been called the " Producer," 
because he engages in production, and succeeds to the 
share of all other laborers to whom he pays wages. 
The share of the Producer is what is left after paying 
all other shares and wages (either in the payment of 
labor direct or as represented in the purchase of ma- 
terial), and is called Profits. 

Profits consist of two elements ; the first is compen- 
sation for the risk of business, and includes " good 
and bad luck " ; and the second is the result of one's 
own skill and business management. The risk of 
business we have already seen. There is a certain 
amount of good and bad luck in the world. Of two 
men who work equally hard and manage equally well, 



THE SHARE OF THE PRODUCER. 401 

one succeeds through good luck, and the other fails 
through bad luck. The result conies from unforeseen 
causes, often causes which nobody could foresee. 
There is an effort among business men to reduce the 
risk from fire, and loss by sea, by means of insurance ; 
but insurance can not touch those more remote hap- 
penings on which the success or failure of business 
often depends. And the failures are numerous. We 
are dazzled by the success of the few, and do not 
notice the failure of the many. % 

The second element of profits is the direct result of 
the economic labor of the "undertaker" of the busi- 
ness ; and he is as much entitled to it as any laborer 
to his own labor. He adds so much to the satisfac- 
tion of human wants. Men differ widely in their 
ability to manage a business. Enterprises are con- 
tinually failing; and others just live along, paying 
rent, interest, and current wages, but afford the owner 
perhaps less than he could get as wages. Still, the 
demand for goods maintains the price just high 
enough to keep what we may call these no-profit 
establishments running. But in some corner of the 
country we see a man, who is producing the same kind 
of goods of equal desirability, paying the same wages 
and selling at the same price ; but who is making a 
fortune each year, when others can hardly make both 
ends meet. This man may not labor two hours a day. 
It does not matter, so that he manages that great 
business as he does. Goods are probably cheaper 
than they would be without him. Laborers get more 
than they could make for themselves. His manage- 



402 DISTRIBUTION OF PRODUCED WEALTH. 

merit enables more goods to be produced with the- 
same effort. This is the result of his economic labor. 
This is his profit. The Producer does not get wages, 
but profits. He pays all other shares, and takes what 
is left ; and what is left depends, apart from risk, on 
his own economic labor in the direction of the busi- 
ness. His management may make this residue fabu- 
lous sums, and nobody else have any less than if the 
management were in less competent hands, with no 
profits at all. 

Of two farmers with the same kind of land, and 
who work equally hard, one gets rich, and the other 
barely makes a living. In a factory with an expense 
of a hundred thousand dollars a year, one owner may 
save ten per cent, over any one else in the business. 
The difference is in the men ; and each man owns 
himself, and his own labor. 

From this it is evident that there will always h& 
profits as long as there is a difference in the business 
ability of men. The entire production of a nation can 
not be carried on by half a dozen of the most superior 
"undertakers." No one knows who are the most 
competent except after long trial. The risk of all 
business in the hands of a few men is too great. It is 
far better for the country that production should be in 
many hands. New men of ability are continually be- 
ing developed, and others are dropping out. Produc- 
tion is already concentrated in too few hands. It 
would be better if we had more small concerns. But 
if the concerns managed with a fair degree of ability 
just pay expenses, all below them will fail ; and all 



THE SHARE OF THE PRODUCER. 403 

which are better managed will pay a profit. The 
goods will sell in the same market at the same price. 
The most superior management will secure large 
profits, which represent its superiority over the factory 
that just pays expenses. If we could arbitrarily raise 
wages, or lower the price of the goods, the factories 
just paying would be forced into bankruptcy ; and 
there would not be goods enough to supply the de- 
mand at the new prices ; else the best factories would 
increase their output, and the production be concen- 
trated into fewer hands, until they were few enough to 
become a Monopoly — and then we have monopoly 
prices. This element of profits represents the differ- 
•ence between the ability of different Producers. 

Profits are limited by competition. The share of 
Monopoly is not profits, and has been considered in a 
previous chapter. Men are so anxious to be in busi- 
ness for themselves that they are willing to do busi- 
ness on very small returns. Wherever there is a 
chance to make large profits, there is a rush of pro- 
ducers. It is this competition which keeps profits 
down, so that the ordinary man must conduct his bus- 
iness with no more than ordinary wages, and often 
with less. The extraordinary profits are due to great 
superiority in business management, and to the good 
luck which comes to some men as a result of the risk 
which ruins others. The man who makes an improve- 
ment in business methods usually gains a correspond- 
ing profit for a few years or months, until his methods 
can be imitated by others, when his profits sink to the 
jiormaL and the gain all goes to the consumer. 



404 DISTRIBUTION OF PRODUCED WEALTH. 

The management spoken of in this chapter is that 
of the owner, or "undertaker," of the business — the 
Producer. He may employ many superintendents, 
whose salaries will be fixed by the laws of Exchange. 

Other minor elements enter into profits, and, there- 
fore, the only definition which covers them is, What 
is left after paying all other shares. What at first 
may be thought to be included in profits may belong 
to good name or monopoly. 

The question may be asked, Do not profits include 
the enormous gain from the Division of Labor, and 
from modern methods of production ? Not at all. 
This great gain shows itself in lower prices of goods, 
in balancing the continually increasing share of rent, 
and in higher wages. The people should get the ben- 
efit of improved methods of production, and they get 
it in lower prices, except where the business is pro- 
tected by monopoly ; and, even then, the monopoly 
can seldom get more than a small fraction of the gain. 
Under competition there will always be business con- 
ducted with no profit, no matter how great the im- 
provement in production may be. Prices will simply 
be lower. Profits will be found in the better man- 
aged and more fortunate establishments, which are 
able to make something at the same prices at which 
some establishments just pay expenses, rent, interest, 
and wages to the employes. 

Profits are not always legitimate. If the shoe man- 
ufacturer uses pasteboard insoles instead of leather, 
the little that he may save is the result of fraud. He 
has robbed the consumer, and taken a larger share of 



THE SHARE OF THE PRODUCER. 405 

the world's production than belongs to him. It i& 
probable that the great success of many men in amass- 
ing wealth is due to swindling rather than to legiti- 
mate profits. The swindle lies, not in making as good 
goods as other people at less cost, but in making arti- 
cles which, while they appear to be as good, are really 
not worth half the money. They do not wear as long- 
as honest goods, or do not satisfy wants as well while 
they last. Yet the customer can not distinguish by 
their appearance before using. Let there be two 
trunks, for example ; one will stand twice as much 
handling as the other, and perhaps required fifty per 
cent, more labor to make. But, while they could 
readily be distinguished by an expert, a customer, who 
buys a trunk only a few times in the course of his 
life, can not detect any difference. Of course, he 
takes the cheaper. He pays a little less, but he has 
been swindled out of half his money. The manufac- 
turer has not made as much as the customer has lost, 
but he has made nearly fifty per cent, more than his 
honest rival. Wealth accumulated in this way is 
simple robbery. What one gains another loses, and 
the victim usually loses twice as much as the swindler 
gains. 



CHAPTER VI. 

'THE SHARE OF THE MERCHANT — PROFITS OF EX- 
CHANGE. 

In the last chapter we considered the share of the 
producer, and now turn to the share of those who 
conduct the world's exchanges. Both are profits. 
Yet the work of exchange is so different from that of 
production, that unless the two kinds of profits are dis- 
tinctly separated, the reader is in danger of overlook- 
ing either the one or the other. 

The share of the merchant is partly a share of La- 
bor, and partly compensation for risk. The mer- 
chant is a laborer in the economic sense ; that is, his 
efforts aid in the satisfaction of wants. He is the 
distributer of the world's productions to those who 
need them. And this labor is no less important than 
that of the producer. The Chinese grow tea, nearly 
enough for all the world. But how is a family to get 
the pound it desires for present use ? Some one must 
go to China, get the tea, bring it to America, and dis- 
tribute it to those who desire it, giving to each that 
one of the many varieties he prefers. More than this, 
lie must tell the people what the taste of each pound 
of the tea will be. A consumer can not try it before 
buying ; but the merchant tries it — employs men to 
<lraw it and taste it for the consumer. The merchant 
sees to it that the teas are properly classified — by 
taste. ( 406 ) 



THE SHARE OF THE MERCHANT. 407 

The right of the members of a co-operative shoe 
factory to the result of their labor means the right to 
the shoes they have made ; but their right is only to 
the shoes, and not to anything produced by other peo-~ 
pie, or to any specified sum of money. Now, the labor 
of distributing these shoes to those who want them, con- 
vincing them that they are the sort of shoes they need, 
and getting money for them, may be as great as that 
required to make the shoes. There are many lines of 
manufacture where the labor of selling is actually 
greater than that of making, especially where a new 
kind of goods is introduced, and their merits must be 
explained. This is the labor of exchange. The cost 
of exchange — of getting tea from China, and distrib- 
uting it to the consumers ; of taking the product of 
every factory, and distributing it with as little loss as 
possible among those who want it ; and conducting 
the exchanges so that each man shall be able to get 
something of everything he wants in exchange for the 
products which he manufactures — this cost of ex- 
change consists of rents on the land used by stores 
and railways ; of interest on the enormous capital in- 
vested ; and of a vast amount of highly skilled labor, 
that of clerks in retail and wholesale stores, book- 
keepers, bank clerks, etc. The business ability re- 
quired in carrying on the exchanges of a country is, 
perhaps, greater than that demanded in the produc- 
tion of all its goods. 

Profits in Exchange are precisely what they are in 
Production. They are what the merchant has left 
after paying all other shares and expenses. The 



408 DISTRIBUTION OF PRODUCED WEALTH. 

owner of a ship in the Chinese trade pays rent for the 
land he may use at a private dock, pays interest on 
the cost of the ship, pays the wages of the captain and 
the crew, pays the Chinese producer for the produc- 
tion of the tea; and sells it for what he can get. If 
he has anything left after paying the expenses, that is 
profit. The retailer buys the tea of the wholesaler; 
pays rents for the ground on which his store stands, 
pays interest on the capital required to keep a stock 
on hand until it is wanted, pays for the labor of trans- 
portation, pays for the labor of his clerks ; and retails 
the tea at a higher price than it cost him. After pay- 
ing all expenses out of the difference, what he has left 
is net profit. It is compensation for his risk, and a re- 
turn for his own skill and labor in the management of 
the business — in selecting such goods as his customers 
are likely to want, buying them low, keeping them in 
good condition, etc. 

Merchants usually speak of the difference between 
the wholesale and the retail price, as profit. For con- 
venience this may be called gross profit ; out of it 
must be paid all the shares of rent, interest, labor, etc. 
The remainder is net profit— which is the only profit 
in the economic use of the term. 

The profit or share of the merchant is determined by 
competition. Nowhere else can competition be so fully 
trusted to regulate prices and profits. If a retail mer- 
chant is doing well, another is pretty sure to set up a 
store by his side. The number of men who wish to 
get into the mercantile business is so large that it is 
claimed ninety out of a hundred fail, and meet with loss 



THE SHARE OF THE MERCHANT. 409 

instead of profit. Surely, this goes to show that the 
profits of these men are none too large. But nowhere 
does business management count for more. One 
merchant in a hundred, serving his customers equally 
well or better than others, selling goods as cheap, and 
keeping the variety they desire, makes thousands of 
dollars a year, profit, when others are failing by his 
side. He knows what to buy and how much, and 
what not to touch. His net profits represent so much 
real addition to the satisfaction afforded a part of the 
community. Without him goods would not have been 
so well distributed, or customers would have paid a 
higher price for them, or been less perfectly satisfied. 
These increased satisfactions are the result of his eco- 
nomic labor, and he is as much entitled to the profit 
as the workman to the shoes he has made. That he 
makes large profits under competition (assuming that 
he is doing an honest business), shows that he is doing 
more to serve the world, more to aid in satisfying 
wants, than others who are making nothing. If any 
one else can perform the same service for a less share, 
the opportunity, under competition, is open to him. 
Competition can safely be trusted to keep merchants' 
profits down to the minimum. The mercantile busi- 
ness is not a natural monopoly, and never can be. 

The question arises whether profits contain other 
elements than " good luck " and business management. 
There are undoubtedly sometimes minor elements, and 
hence the only definition of profit is, "what is left 
after paying all other shares." Yet almost all ele- 
ments beyond " good luck " and business management 



410 DISTRIBUTION OF PRODUCED WEALTH. 

which are popularly supposed to belong to profit are 
not profit at all. Let a man start a new business in a 
Jine where competition has free play, and all the profit 
he makes the first year will be likely to be due to his 
management of the business, and his good fortune. 

Profits, then, whether made in Production or Ex- 
change, are what the producer or merchant has left 
after paying all other shares and expenses. It has 
been assumed that he pays laborers a fixed sum, as 
wages ; although he sometimes bargains with them to 
take a share of the profits in the place of wages. 
This is usually where he has very intimate relations 
with the employe, and fully trusts him. In some lines 
of business it would be fatal to have one's profits 
known. In a poor year, when he made nothing, 
the fact might injure his credit ; and in a good year 
rivals might be tempted to engage in the same busi- 
ness, supposing that all years are good. The competi- 
tion of trade is so severe that in many lines consider- 
able secrecy in the method of managing one's affairs 
is necessary to success. Where a clerk has a share of 
the profits in place of salary, it is necessary that he 
know what the profits are, and all details connected 
with them. Such information made public may pre- 
vent the making of any profit at all the next year. 
Partners divide the profit among themselves on terms 
previously agreed upon, as their compensation. 



CHAPTEK VII. 

THE SHARE OF THE LABORER WHO WORKS FOR 

HIMSELF. 

The laborer who works for himself is in the place 
of the " Producer " of Chapter V. He receives the 
total product after paying rent and interest. If his 
labor is of a kind that satisfies wants directly, he re- 
ceives its advantage in the satisfaction of his own 
wants, or those of his family or friends to whom he 
gives his services. If his labor is of a kind that 
satisfies wants indirectly, he has the goods produced, 
to sell or exchange for such things as he needs. 
With the growth of large factories, more men work 
for wages than formerly, but the largest line of pro- 
duction, that of farming, is carried on by men who 
work for themselves. The farmer works for himself. 
He may pay rent to a landlord, and interest on bor- 
rowed capital. He may pay wages. But after pay- 
ing these shares he has the remainder of the product. 
He does not get wages. 

Where the laborer works for himself, his reward is 
determined by the price he gets for the product, under 
the laws of Exchange. The farmer often feels that 
the price of grain is too low and the prices of goods 
are too high. He pays more for his agricultural im- 
plements because the iron workers receive what often 
seems to him a fabulous price for their labor. He 

(411) 



412 DISTRIBUTION OF PRODUCED WEALTH. 

does not know why everything is so high and the 
price of grain so low, and likely blames the merchant 
and the grain-buyer because these are nearest to him. 
But • the contest is in the prices of grain and goods, 
where it should be. He knows he gets all he pro- 
duces ; and has only the difficulty of every other man 
in the world who wants to sell dear and buy cheap. 
But he fights it out in the province of Exchange, 
where there is some hope of settlement, and where 
substantial justice is likely to be done under the in- 
fluence of competition. He is more independent than 
the wage laborer, because he works for himself. 

In the early history of this country the greater 
portion of production was carried on in this way, and 
the line of small producers is not yet extinct. In 
many branches of business there will always be men 
who will work for themselves and sell the product. 
But in other lines of production, the small producers 
have been crowded out by large factories, made neces- 
sary by the improvements in machinery. Here, the 
only means by which laborers can work for themselves 
is on the plan of co-operation. Co-operation is said 
to have been tried and failed ; it will probably fail a 
good many times before it succeeds, yet it presents 
the only escape from a much larger wages class than 
is desirable. 

By co-operation we mean the union of those who 
would have been small producers on their own account 
a few q-enerations ago. It is not so uncommon a 
thing as we imagine, since it is only an extended form 
of partnership. Two, three, or four men now unite 



THE SHARE OF THE LABORER. 418 

in the ownership and management of business, each 
one giving special attention to the branch which he is 
best fitted to attend to. Why may not the number 
b>e extended to twenty or a hundred ? Co-operation 
demands as much judgment and business sense on the 
part of each member as was required of a small pro- 
ducer a hundred years ago. But there are thousands 
of men capable of carrying on a business, who can not 
own a plant costing hundreds of thousands of dollars, 
and there is perhaps nothing else left for them to do 
but to work for wages. If a hundred of them could 
unite, they might carry on a business which would 
rival that of the largest producer in their line. Of 
course, each one must know how the business is man- 
aged, and what are the profits and losses. They must 
pay all expenses, and take the total product for their 
share in place of wages. They will probably employ 
men and pay wages, but they will be satisfied with 
their own share, even though it is less than the wages 
they pay, since they know it is all there is. 

The advantages of co-operation are two ; first, to 
Society ; and second, to the workmen. 

The advantage of co-operation to Society is that 
the workmen know that they get all there is, after 
paying rent and interest. A great deal of discontent 
would be avoided, and vast losses by labor troubles 
prevented. The members of a co-operative factory 
are also likely to be more independent members of 
society, and to take a broader view of its interests. 
No matter how high the dispute may run over prices, 
the independent producer will not stop work, as men 



414 DISTRIBUTION OF PRODUCED WEALTH. 

go on a strike. He can gain nothing by that. If 
prices are too low, men may close their factory, and 
engage in some other line of production ; they would 
hold back their goods from the market if they thought 
anything could be gained by it, but they would not 
stop work, and would not engage in the destruction 
of property, or attempt to prevent other men work- 
ing. The battles under Exchange are not so destruc- 
tive to the interests of society as under the wages 
system, and the warfare is more likely to be of intel- 
lect than brute force. 

Advantages of Co-operation to the Work- 
man. — -The workmen would gain, not only natural 
wages, but the share of profits ; and in time that of 
"good name"; and, in some cases, that of monopoly. 
They might get everything except rent and interest- 
The poorest managed factory that could exist would 
pay only wages ; the more successful would pay 
profits. 

Successful co-operation, as success in any large 
business, depends on good management; and good 
management depends largely on one good manager, 
just as the success of an army depends on a general. 
The best known interest of co-operation in the United 
States is the fishing industry of New England, which 
has been managed in this way from the beginning. 
Each man received a share of the profits, though a 
whaling vessel might be gone two years. Such ships, 
however, had a captain, whose authority was no less 
than when seamen are paid wages ; and whose share 
was as large in proportion to those of the men as the 



THE SHARE OF THE LABORER. 415 

salary of other captains to the wages of a common sea- 
man. It is useless to talk about a co-operative factory- 
run by a committee of the workmen. There must be 
some one in control, and he must receive either as. 
large a salary as a private corporation would pay him,, 
or a large share of the profits, else he will transfer his 
services to private companies. 

Good management, however, by no means depends 
on one man alone, and here would be the strength of 
the association. The foreman of every department, 
and many of the workmen, would be members, and 
receive profits instead of wages. The details of the 
business would therefore be well managed. Good 
work could be put out, which would sell goods in the 
future. The book-keeper and the traveling salesman 
would be members of the body, their compensation 
depending on its profits. Although a considerable 
number of men might be employed at wages, there 
would be enough members of the firm in every de- 
partment to see that there was no waste — that every- 
thing was done as it should be, and that the business 
was economically managed. The laborers would also 
secure the share of " good name " as soon as they made 
one. No new firm has a name which is worth any- 
thing. It must be built up, often by years of effort. 

If engaged in business where competition is free, 
the only monopoly the co-operative factory is likely to 
deal with is that of patents. So far as patented de- 
vices are in general use they must pay royalty the 
same as others. But there is every opportunity for 
minor inventions in their factory by men who are in- 
27 



416 DISTRIBUTION OF PRODUCED WEALTH. 

terested ; and patents owned by themselves, and trade 
secrets, are monopolies of which they derive all the 
benefit. 

The chief difficulty in the way of co-operation is 
the unwillingness to pay a general manager what such 
a man can command from private companies. A 
good manager will sometimes double the net income 
of a factory, though he may labor fewer hours than 
any other man employed about it. There is every 
reason to believe that managers for co-operative facto- 
ries could be secured for much less than they could 
make in carrying on business for themselves. There 
are vast numbers of men competent to manage busi- 
ness, who have not the capital, and can not borrow it 
without security. A body of laborers with a good 
reputation, and a business manager with an equal rep- 
utation, might more readily secure the use of capital 
than one man by himself. A small contribution from 
each man would furnish a part of the necessary capi- 
tal, which would be security for what they needed to 
borrow. A number of positions of this kind will 
tend to develop more managers out of the ranks of 
the workmen and clerks. 

A co-operative factory, then, gets the shares of 
profits, good name, and perhaps monopoly. Its mem- 
bers receive the total product of their labor, out of 
which they have to pay only rent and interest — rent 
for the land occupied, and interest on the money bor- 
rowed. The co-operative factory gets something more 
than the natural share of wage labor, because it con- 
tributes something: more than wag:e labor. On the 



THE SHARE OF THE LABORER. 417 

other hand, receiving profits, it must bear losses. 
The failure of most co-operative factories results from 
a lack of stamina to meet losses, and to accept half as 
much as could be made in wages, for one year, in the 
hope of getting more the next. There is also a failure 
to appreciate the advantage of owning one's own busi- 
ness, and of steady employment in a bad year at even 
half wages, as contrasted with the chance of being 
thrown out of employment altogether. Few co-oper- 
ative men realize the value of the " good name " and 
business they might build up during the best years of 
their lives, which would almost support them in their 
old age. In short, the very qualities are demanded 
for co-operation that are possessed by successful busi- 
ness men of " nerve," and it would probably be un- 
safe to admit any man to membership in a co-opera- 
tive company who would not have been capable of 
carrying on a small business of his own in the days 
when there were no great factories. 

Co-operation would not abolish the wages class. It 
could do no more than unite men of considerable bus- 
iness ability, nerve, self-restraint, and judgment, into 
companies for production. They would naturally fill 
the more important positions, of superintendents, fore- 
men, book-keepers, traveling salesmen, etc.; though 
there is no reason why the men of the least mechani- 
cal skill, and those whose manual labor counts for the 
least, should not be members of the company, receiv- 
ing the smaller share to which they are entitled, pro- 
vided they have the intellectual and other qualifica- 
tions necessary. 



418 DISTRIBUTION OF PRODUCED WEALTH. 

Laborers who work for themselves — farmers, small 
producers, members of co-operative factories, etc. — re- 
ceive, therefore, the total product of their labor after 
paying rent and interest, with perhaps other minor 
shares. Their ultimate reward depends on what they 
sell the goods for, and what they pay for the goods 
they buy for their families. It is merely a question 
of exchanging what one makes for what other groups 
of laborers make. The real contest is between va- 
rious groups of laborers — between the farmers, the 
makers of agricultural implements and machinery, 
furniture workers, house builders, and woolen and cot- 
ton spinners and weavers : it is a contest of every 
class of laborers with every other. If one class gets 
more, another must take less. There is only so much 
to be distributed. Shall the farmer's share be in- 
creased and the iron worker's share diminished, or 
vice versa. Many laborers would receive a good deal 
in consequence of " good name." The small farmer 
near a city often gets double price in consequence 
of the reputation of his produce. There would be 
something paid to monopoly, but almost the entire 
product of the nation's industry, after deducting the 
shares of rent and interest, would be divided among 
the groups of laborers working for themselves. 

The merchants are one group of laborers, and since 
they come in contact with all other groups, every one 
lays the blame for its own small share on them. 
Hence we hear so much about the "middle men." 
The truth is, the merchants are as necessary as the 
producers. What is the product of a shoe factory 



THE SHARE OF THE LABORER. 419 

worth to the workmen, even if they have the whole 
of it? Why, precisely what they can get for it. 
But no one family wants more than a few pairs of 
shoes ; and if the workmen were to attempt to ped- 
dle them out by house-to-house visits over the coun- 
try, it would take them longer than to make the 
shoes. The selling of a product is just as important 
to the producer as its production, and the merchants 
can usually sell it with less labor than he can. They 
understand the business of selling, as he understands 
the business of manufacturing. If, however, the mer- 
chants get a large share of a nation's products for dis- 
tributing them, other groups of laborers must get 
less ; if all others get more, the merchants must take 
less. Unless we can increase production, there is only 
so much to be distributed, and it is a question of 
what laborers shall get the most. We have seen 
that competition fixes the share of the merchant; it 
would also fix the share of every other group of 
laborers. The real contest would be between groups 
of laborers — farmers, carpenters, masons, workmen in 
each branch of manufacturing, railway employes, mer- 
chants' clerks, etc. The more one class receives, the 
less other classes must have, since there is only so 
much to divide. Each class would seek to sell its 
product as dear as possible, and to purchase as cheap 
as possible, and the play of competition would deter- 
mine what share each would obtain. Competition 
would also determine the share of each member of a 
group of laborers in a co-operative factory, relative to 
the total share of the factory. 



CHAPTER VIII. 

THE SHARE OF THE LABORER WHO WORKS FOR 

WAGES. 

It is not within the plan of this book to enter into 
any extended discussion of the " wages question," 
which would require a volume by itself. An im- 
portant phase of the labor question was treated in the 
book on Exchange, in the labor cost of production. 
The object of the present chapter is mainly to show 
the place of the wages question in the general system. 
Wages are a question of Exchange, and the practical 
wages questions are applications of the principles laid 
down in the book on Exchange in this volume. All 
that has been said of utility, value, supply and de- 
mand, competition, combination and monopoly, finds 
an application in wages as well as in prices. 

The wage-worker differs from the man who works 
for himself in that he sells his labor, whereas the 
latter sells the goods he produces. One can more 
easily see the laws which fix the prices of goods than 
he can see those which fix the price of labor. The 
farmer sells wheat, and its price depends on supply 
and demand. The wage-worker sells labor, and its 
price depends on supply and demand. Both are 
questions of Exchange. The majority of wage- 
workers can probably get more for their labor di- 
rect than for the goods they would produce in work- 

(420) 



WAGES. 421 

ing for themselves, even if they were able to bor- 
row the capital necessary to engage in production. 

While wages depend on supply and demand, it is 
the supply and demand for labor, and not for goods 
— an important distinction. But one element in the 
demand for labor is the anticipated demand for goods, 
Nobody will pay wages in production unless he ex- 
pects to sell the goods the laborer helps produce ; un- 
less he has reason to expect a demand for the goods, 
he will not employ labor. An increase in the number 
of laborers may, however, cause an increase in the 
demand for goods, since the laborers themselves con- 
stitute a demand, and with their wages will buy either 
the goods they themselves help produce or those pro- 
duced by other laborers. 

But the wage-laborer does not propose to produce 
goods and sell them when finished, farmers and co- 
operative factories do that, he is looking for a man 
who will pay him wages every week or month, and 
take the risk of selling the goods for enough to pay 
the cost of production. The wage-laborer's employ- 
ment depends on finding such a man. Wages, there- 
fore, depend directly on the number of employers, 
and the number of men they believe they can profit- 
ably set to work. The wage-worker must have one 
more man, or company, between himself and the con- 
sumer than the laborer who works for himself. It 
is an old saying that " When two bosses are seeking 
one laborer, wages will be high; when a multitude 
of laborers are seeking one boss, wages will be low." 

Highest Permanent Limit of Wages. — The high- 



422 DISTRIBUTION OF PRODUCED WEALTH. 

est permanent limit of wages is what the goods pro- 
duced sell for, less rent, interest, and enough profit 
to induce producers to continue business. Let us 
give a moment's thought to this proposition. The 
wage-worker can not permanently receive more than 
his labor produces. No one will pay him wages un- 
less with the hope of selling the goods he makes for 
enough to reimburse himself. Anything else would 
not be wages, but charity. The workman can not, 
therefore, get more than what the goods he makes 
sell for. But rent is paid for the use of a profitable 
location, rather than take one where production would 
cost more. Capital can not be had without interest. 
If the employer uses a patented process or machine, 
he must pay royalty to the monopoly. Now, the 
goods produced must sell for enough to pay all these 
charges, or the employer must stop business. In no 
case can the laborer continue to get more than what is 
left after paying rent and interest. 

How about profits? There will be some manufac- 
turers who will continue to do business without profit. 
In their factories the wage-laborer may get all the 
goods sell for, less rent and interest. But there are 
better business managers who will sell their goods at 
the same price as the others, pay the same wages, and 
make large profits. There is no reason why they 
should sell their goods for less, since the same quality 
of goods will bring the same price in the same market. 
There is no reason why they should pay laborers any 
more than the factory which is making no profit. 
They might discharge their own hands, and hire those 



WAGES. 423 

of the no-profit factory. Wages, as well as the price 
of goods, tend to the same rate for the same service. 
Suppose wages should rise so as to take the profits of 
the best managed factories ; then those managed with 
less ability would be compelled to close, for they were 
before making nothing — -paying out in wages, rent 
and interest, all the goods sold for. Now that wages 
are higher they can no longer run without loss. But 
the closing of so many factories would throw many 
laborers out of employment. Hence there must be 
profits, sufficient to keep the wheels of industry in 
motion, and these profits must be paid out of what 
the goods sell for. 

It is the same with the share of " good name." 
There will always be factories which have no good 
name to speak of. They must pay expenses, or their 
workmen will have nothing to do. But the factory 
with a good name can sell its goods higher, and will 
not give this additional price to labor. Why should 
it ? It is the good name of the brand of the goods 
of the factory, not of the workmen employed. It 
could take the workmen from the factory which has 
no good name, and still sell its goods higher. 

The poorest managed factories with no reputation 
must, therefore, pay rent and interest out of what the 
product sells for, and the wages of the workmen can 
not exceed what is left. The best managed factories 
will pay the same wages, but will have something left 
for profit. The best managed factories with a " good 
name " will pay the same wages, but sell their goods 
at a higher price than the others, and have something 



424 DISTRIBUTION OF PRODUCED WEALTH. 

left for profits, and something for the reputation of 
their goods. Wages will be practically the same in 
all factories ; and the highest permanent rate is what 
the no-profit factories, which the demand for goods 
keeps running, have left after paying rent and in- 
terest. 

Raising Prices. — The foregoing shows the highest 
limit of wages possible without raising prices. Assum- 
ing that the furniture workers of the country are re- 
ceiving this highest natural limit of wages, if they 
could get their wages doubled, the price of furniture,. 
so far as wages enter into it, would also be doubled. 
Profits would be doubled. All workmen who buy 
furniture would then pay more for furniture, and the 
furniture workers have doubled their wages at the ex- 
pense of the consumers, nearly all of whom are other 
workmen. The farmer, the iron-worker and the printer 
pay so much more for their furniture, and their real 
wages or incomes are reduced. 

For it is not "nominal," but "real wages," that 
we are seeking. Nominal wages are those paid in 
money. Real wages are what the laborer can buy 
with the money received. If the rise in the wages of 
any trade has the effect of increasing the price of the 
goods manufactured, these workmen gain at the ex- 
pense of other laborers. It often happens that the 
natural fall of the prices of goods in consequence of 
improved methods of production does not take place, 
because wages are advanced. In this case the work- 
men in that particular line reap the benefit that would 
naturally go to the public. 



WAGES. 425 

It is probable that the farmers are at present the 
greatest sufferers. They can not increase the price of 
wheat, because it is fixed by the foreign demand. 
They get no more money than before. The wages of 
workmen in many lines of production carried on in 
factories have been increased ; and the farmer pays 
more for the goods he buys. It is true he suffers 
from monopolies, but high wages affect him ten times 
as much. Railroad steel and machinery cost more, 
and railroad charges are consequently higher ; so that 
the farmer gets less for his grain than if wages in 
rolling-mills, and among railroad men, were lower. 
Economically, no two interests are more opposed 
than those of farmers and mechanics. It is for the 
interest of every class of laborers to have wages in 
other lines of production as low as possible, in order 
that its own wages may buy more goods. It is for 
the interest of farmers that the wages of all workers 
in factories and on railroads should be low, in order 
that the money received for farm produce may buy 
more goods, and that freights may be cheap. There 
undoubtedly exists an idea among workingmen that 
the more wages any class receives the better for the 
others. Nothing could be farther from the truth. 
When one class gets more than the highest rate of 
wages consistent with present prices, other classes 
must receive less of real wages, because of higher 
prices. High wages do not increase production, and 
there is only so much to divide. 

Even where wages sink to their lowest limit, and 
there is free competition, other laborers reap the 



426 DISTRIBUTION OF PRODUCED WEALTH. 

chief benefit. In the " sweat-shops " women often 
make clothing for a mere pittance ; but this clothing is 
sold cheap, and is presumably bought by other labor- 
ers. The millionaire has his clothes made by a fash- 
ionable tailor, whose workmen receive the highest 
wages. The clothing that is made by starving women 
is bought chiefly by laborers, and they get the benefit 
of the low wages the women receive. Here is un- 
doubtedly an instance where one class of laborers, the 
sewing women, should receive more and other laborers 
less ; but it shows how wages are a division of the 
greater part of all that is produced. We can not 
have high wages and cheap clothing at the same time. 
Recent investigations in London have shown that the 
sewing women who work for the lowest starvation 
wages are employed by men almost as poor as them- 
selves ; that the relations of employer and employe 
are friendly, and that the employer makes little more 
than the men who work under him. Wages are so 
low because the clothing is sold so cheap ; and the low 
price is the only thing that enables other poor persons 
to keep themselves comfortably clad. In American 
cities, however, it is claimed that employers in " sweat- 
shops " make something. Wages must be paid out 
of the annual production of a country. A large an- 
nual product, with a small population to divide it 
among, affords the opportunity for the highest wages. 
It is true that the method of manufacture of cloth, 
ing by the " sweating system " in London may not be 
the most economical, and that the work could be done 
cheaper in a factory ; but this does not affect the prin- 



WAGES. 42 T 

ciple involved. In the case of monopoly we may have 
high prices of goods with low wages ; but where com- 
petition acts, either wages rise or prices of goods fall 
to the limit of lowest profit which will keep up suffi- 
cient production. We often fail to realize that cheap 
goods are of as great advantage as high wages. 

It should be remembered that it is only the highest 
natural rate of wages that can not be increased with- 
out raising prices, and taking from other workmen. 
We assumed that the workman was receiving all that 
the product sells for, less other necessary shares. One 
difficulty with the wages system is that a workman 
can not usually know whether he is receiving this 
highest natural rate of wages or not ; and we are all 
likely to think that we are receiving less than we 
should. One of the advantages of co-operation is that 
the workmen get all they produce, less rent, interest, 
etc.; and know that they get it. This knowledge is the 
most important of all. It gives contentment to a man 
to know that, small as his income is, he gets all that is 
justly due him, all that he produces. If competition 
were unrestricted, and there were no friction, wages 
would tend to this highest natural rate. New fac- 
tories would spring up, and employers would seek 
laborers whenever wages were below this standard. 

A monopoly may, however, not only sell its goods 
at the highest price the public can afford to pay ; but 
employ laborers at the lowest rate at which they can 
afford to work. Even where there is not a complete 
monopoly, there are frequently partial monopolies; 
and there is always a good deal of friction in eco- 



428 DISTRIBUTION OF PRODUCED WEALTH. 

nomics, as in mechanics. Hence wages often fall 
below the highest rate that current prices would 
bear. 

In every effort to raise wages it should be asked 
first, Is it expected that the proposed increase will raise 
the prices of the goods, and thus be paid by the con- 
sumers, — nine-tenths of whom are other workmen, — or 
that the additional wages can be paid by the employer 
without increasing prices ? Where competition is 
active, any general increase of wages is likely to 
raise prices ; where there is a monopoly, an increase 
of wages may come out of the share of monopoly, or 
may result in raising the prices of the goods, accord- 
ing to the circumstances of each case. 

The wages of all laborers of the same grade, in the 
same line of production, tend to the same rate in the 
same locality. But there are, as J. E. Cairnes showed 
us, non-competing groups, and the wages of the men 
in each group will be determined by the supply and 
demand for labor in that group, without much refer- 
ence to other groups. Brickmasons do not compete 
with jewelers, or jewelers with printers. There might 
be a great scarcity of blacksmiths, but carpenters 
could not take their places. If laborers are scarce in 
one line of production, the prices of the goods they 
make are likely to rise ; and their wages will be in- 
creased at the expense of the real wages of other 
classes. If the ranks of labor in another line of pro- 
duction are overcrowded, and competition is free, wages 
will be forced down ; and the prices of the goods they 
make will proportionally fall, so that all other labor- 



WAGES. 429 

ers who use these goods will gain at the expense of 
the laborers who make them. 

It might be supposed that laborers would at once 
be transferred from the line of production in which 
wages are low to that in which they are high. This 
happens in the numerous employments denominated 
" common labor," where no previous training is re- 
quired ; and the wages for a great many lines of em- 
ployment, therefore, remain the same. It is because 
the wages are the same, that the employments are 
classed together in the popular mind as " common la- 
bor." In employments which require previous train- 
ing, transfers are not so readily made. A man does 
not easily learn a new trade after middle life. Young 
men, however, in learning new trades, naturally select 
those in which wages rule highest, or in which the la- 
bor is most desirable. The full force of competition 
is not felt, even here, because many boys learn not the 
trades they choose, but the trades they must. Fre- 
quently one takes the first opportunity open to him, 
and the selection is almost a matter of accident. 

The question is frequently asked, " What can be 
done to increase wages ?" and it suggests another, 
" Are not the interests of the farmers, the grocery- 
keepers, and the innumerable small producers who 
work for themselves, as important as the interests of 
the men who work for wages ?" The economist has 
at heart the interests of the whole people. 

With the improved methods of production ought 
not the wage-laborer, as well as others, to get more ? 
Most certainly; he does get more, more nominal 



430 DISTRIBUTION OF PRODUCED WEALTH. 

wages, and still larger real wages as measured in the 
goods lie buys. He may not get as much as he 
should ; but he certainly gets more. He gets more 
because he produces more ; but he can not get more 
than he produces, with the deductions before men- 
tioned. Improvements in production show themselves 
in reduced prices, which benefit all classes, the wage- 
workers as well as others. The improvements in pro- 
duction have, fortunately, resulted in lowering the 
prices of such goods as the laborer uses to as great an 
extent as those consumed only by the wealthy. 

There are two reasons why the laborer feels that he 
has not gained as much as he should : 

(1.) The improvement in his condition does not 
appear to be as great as it is, because of the gain 
to all classes. One's wants are, to a certain extent, 
relative. He compares his condition with those about 
him. If all other people have as much more as he 
has, he seems to himself no better off than before. 
If everybody wears coarse clothing, it is the fashion, 
and one feels as well dressed as his neighbors. If 
other people have luxuries, one feels his poverty > even 
though he may have absolutely twice as much as be- 
fore. One considers his relative, rather than his ab- 
solute, income. Yet the hope of society is to elevate 
all of its members; and if all receive more!, the la- 
borer may feel as poor as before. With the great in- 
crease in wealth of a very small class of society, the 
laborer is inclined to measure himself with it rather 
than with the average of the people. 

(2.) The laborer has not received as much as the 



WAGES. 431 

improved methods of production would warrant had 
there been no increase in the value of land, and in the 
great share of rent. In a new country the share of 
rent is very small ; as the population increases, the 
proportion of the product which goes to rent con- 
tinually grows larger. It is not only that the laborer 
must often pay more for the land on which to build a 
house than the house will cost ; but the rent of the 
priceless land on which great buildings in cities stand, 
the rent of valuable land at harbors and railroad cen- 
ters — all rent must come out of the nation's product, 
and leaves less for labor. He pays more for lumber 
for building a house. In a new country he could build 
a house of logs on land which he could buy for a few 
dollars. Even lumber cost little, because the timber 
had not been cut off. 

The early history of this country was the golden 
age of the laborer, in comparison with all that had 
gone before. Land was plenty, and if one could not 
get wages, he could get a farm. Labor was scarce 
compared with land ; now, land is scarce compared 
with labor. The high wages of this country have 
been due, almost entirely, to the abundance of land, 
and the low rents as compared with the densely popu- 
lated lands of Europe. With the increase of popula- 
tion, wages must continually become a smaller share 
of the nation's annual product, though not absolutely 
smaller for the labor performed. The share of rent 
will grow larger; and the share of wages, smaller. 
Thus far, improvements in production have more than 
balanced the natural decrease in wages through the 
28 



432 DISTRIBUTION OF PRODUCED WEALTH. 

growth of population. With unlimited immigration 
there is no such thing as maintaining high wages for 
all classes. To increase wages does not increase pro- 
duction ; and no nation can have more than it produces. 
A high scale of living for all the people must mean a 
relatively small population, with abundant capital ; so 
that the Resources of Nature can be made to produce 
more goods in proportion to the people. 

One of the most unfortunate things about the wages 
system is the temptation to spend all of one's wages, 
whether high or low. A wage-worker has the money 
every week, and there are so many opportunities of 
getting a present satisfaction out of it, that it requires 
more than ordinary command of one's self to save. 
The farmer, on the contrary, often has to save. He 
can not get the money each week. When the crop is 
sold he has something saved. He is also compelled to 
save in the improvement of his land. This is one of 
the arguments for a true plan of co-operation. Work- 
men could not safely allow themselves more than half 
of the ordinary weekly wages. At the end of the 
year they should have something saved, which would 
be needed as capital. 

The principles on which high wages depend are the 
following : 

1. Other things being equal, wages are always 
highest in a new country, or a country with a small 
population relative to its Resources, because the 
share of rent will be less, and there will be more to go 
to labor. It was for this reason that real wages were 
so high in the early history of the United States as 



WAGES. 433 

compared with Europe. In England the share of 
the land-owners is enormous, far greater than in the 
United States. 

2. Wages can be increased through increased pro- 
ductiveness of labor. The same number of laborers 
produce more, and there is more to divide. This is 
the second reason for high wages in the United 
States, where labor is more effective than in any other 
country in the world. It is also the principal reason 
for higher wages in England than on the Continent, 
since English labor produces more than in any other 
country of Europe or Asia. 

3. Wages will be highest where there is freest com- 
petition between employers in all lines of production, 
because laborers may then get the share that would 
otherwise go to monopoly. 

4. Wages will be higher in a country like the 
United States, where there are numerous employers, 
and many men anxious to get into business for them- 
selves. In an enterprising country, with thousands of 
men on the lookout for a chance to make something, 
and willing to take risks, the demand for labor will be 
brisker than in a slow country where few new men 
think of undertaking production, and everything is 
left in the old channels. 

5. Success of co-operative factories would tend to 
increase the wages of laborers by withdrawing many 
wage-laborers from the market. If co-operative fac- 
tories could be managed as well as private enterprises, 
thev would soon absorb the best and most intelligent 
laborers of the country. 



434 DISTRIBUTION OF PRODUCED WEALTH. 

Profit Sharing has been put forward prominently 
during the last few years as a means of increasing the 
income of the laborers. Its advantages are those of 
co-operation as far as they go. If, for example, wage- 
workers could accept half wages, and half profits, we 
might realize the advantages of co-operation. Living 
on half wages, they might in many cases save the 
profits, which they would receive at the end of the 
year. 

Profit sharing, as the term has come to be used, 
however, does not contemplate any reduction in wages. 
Its advocates are particular to insist that the employer 
shall also pay the very highest wages. How, then, 
can a producer in competition with others pay as high 
wages as they, and give away part of the profits, which 
have been reduced to the lowest possible sum by com- 
petition ? The answer is, that the producer expects 
that the offer of a share in the profits will be an in- 
ducement to extra exertion and saving on the part of 
employes, so that more will be produced at the same 
cost, and he will have a larger profit, which he can 
divide. That is, he expects to pay employes some- 
thing extra out of increased production due to their ex- 
ertions. Suppose a large corporation to make $10,000 
a year, net profit. By carefulness and extra exertion 
on the part of every employe, that profit might be 
increased, and the corporation make $12,000. It 
could then give its employes $2,000, and have as 
much left as before. Profit sharing in theory should 
lessen the danger of strikes, although strikes occur 
under it. Now, a strike inflicts a good deal of damage 



WAGES. 435 

in any business. Even though the employer can not 
afford to yield, and his men return to work in the end, 
he has lost heavily. Any manufacturer would pay 
something to an insurance company to be guaranteed 
against loss from strikes. If profit sharing were sure 
to prevent them, the employer could afford to give a 
portion of the profits to employes to be protected from 
the damage they and their associates have the power 
to inflict upon him. This is an application of the 
principle that the way to increase the wages of labor- 
ers is to increase production. 

Profit sharing is capable of much further extension 
than co-operation. It is not limited to men who have 
saved capital, or who have the ability to manage a 
business for themselves. A very serious objection to 
profit sharing is the fact that few private employers 
can afford, to make a statement of their business with- 
out risk of ruin, and the plan of offering the employes 
a share of the profits without telling what per cent, 
that share is, can hardly have permanent success. 
Semi -public corporations, which are now compelled 
to make public statements of their business, appear 
to afford the most favorable field for the experiment. 



CHAPTER IX. 

THE SHARE OF LABOR WHICH SATISFIES WANTS 
DIRECTLY. 

The share of labor which satisfies wants directly 
differs decidedly from that which satisfies wants in- 
directly, because it is not measured by material pro- 
ducts. When a hundred men have engaged in the 
manufacture of shoes, any one can see that their re- 
ward must come out of what the shoes sell for. 

The share of labor which satisfies wants directly is 
determined by exchange. This labor does not pro- 
duce material commodities to divide. The boy who 
blacks one's boots, the girl who serves in the kitchen, 
the lawyer who argues one's case, the singer whom 
thousands flock each night to hear — all these satisfy 
wants directly. If they satisfy their own wants, as 
when one blacks his own boots, or cooks his own food, 
they are thus far independent of others. The circle 
of wants and satisfactions is complete within them- 
selves. But when one devotes his time to the service 
of others, he expects to receive a fair share of the 
world's products in exchange for his services. The 
teacher and the lawyer and the physician are at first 
paid in money, but this merely represents goods and 
the personal services of others. Money, here as else- 
where, is only the means by which the exchanges take 
place. 

(436) 



THE SHARE OF THE LABORER. 43 T 

How Will the Share of this Class of Labor 
be Determined ? 

1. Partly by competition ; the supply of labor and. 
the demand for it. The limits between which the 
compensation will fluctuate are the least the laborer 
can possibly accept, and the most others can afford to 
pay. The wages of servant girls are mainly fixed by 
competition. The girl must have shelter in the house 
of the employer, meals, and a sufficient sum of money 
for clothing. It is impossible for her to do this sort 
of work for less, and this is all that some girls receive. 
One servant may, however, be worth four times as 
much as another ; and may thus receive, through com- 
petition, higher wages. There are girls who make 
such poor servants that no one will give them even 
board and clothing ; the supply of better help is suf- 
ficient to avoid the necessity of employing them. 
Competition does not mean that every laborer will 
receive the same wages ; but that wages will be in 
proportion to ability, and that the wages of a certain 
grade of service will be fixed at a given rate. The 
wages of servant girls are by no means wholly fixed 
by competition. Other motives enter in, such as a 
desire for their welfare, custom, public opinion, etc. 

Instead of competition, the reward of some labor is 
fixed by monopoly. This is partially true of all per- 
sons who stand so high in their own department that 
no one can exactly take their place. Joseph Jefferson 
played Rip Van Winkle as no one else coidd. He 
charged monopoly prices ; that is, the highest sum 



438 DISTRIBUTION OF PRODUCED WEALTH. 

the public would pay. An eminent physician may 
charge monopoly prices, without even the limitation 
that the price shall he the same to all. He may put 
his regular charge so high that only the very wealthy 
can pay it, and serve some less wealthy patients for 
what they can afford to pay. The laborer of rare 
skill is entitled to monopoly prices by the highest 
right in the world, that of each man to his own labor. 
If he does nothing, the world is no worse off than it 
would be without him ; and his services are worth 
what he receives, else people would not pay his 
charges. When a woman sings as no other woman in 
the world can, her power is her own. She has the 
right to its absolute control. She is entitled to what- 
ever anybody is willing to pay to hear her song. 

A partial monopoly of labor is found in a profes- 
sion in which most of the members agree not to 
charge less than a certain sum ; or fix rates which 
they regard as reasonable, below which nobody is ex- 
pected to go. Men who do not belong to this associa- 
tion may charge lower prices, and competition is per- 
fectly free ; but the fact that a considerable number, 
perhaps the majority of the best members of the pro- 
fession, refuse their services at less than a certain 
price, has its influence. This method would not make 
it possible to raise prices above a certain rate, proba- 
bly not to maintain them above what the wealthier 
class of people regard as reasonable ; but it modifies 
the influence of competition, even though there is a 
large number of fairly competent men in the same 
profession practicing with lower fees. It is under- 



THE SHARE OF THE LABORER. 439 

stood that the laborer's power of labor is his own, and 
that his right to what persons are willing to pay for 
his services is unquestioned. 

Any attempt to prevent other men from practicing 
at lower rates, by force, would be instantly, and justly, 
condemned. Any man has the right to serve others 
for as low fees as he chooses to accept, and that right 
must not be interfered with. 

3. The share of labor which satisfies wants directly 
is sometimes determined by what those one serves 
think he ought to have ; and sometimes by the cost 
of living in the way which the service requires. The 
salary of a minister is worth a moment's study. His 
congregation and duties demand that he shall live in 
a certain way. In a city the people would not expect 
him to appear in the pulpit unless fairly well dressed. 
As a teacher, they desire him to have books and peri- 
odicals ; and it is to their discredit if he lives below a 
■certain standard. Unless the minister has means of 
his own, his congregation understand that they must 
pay what it costs him to live in the toay they de- 
mand ; and few congregations pay any more. When 
his salary is fixed, the minister usually accepts the 
lowest sum he thinks he can live on, in the way he 
will he expected to live. Competition is more likely 
to show itself in the case of young men. Some con- 
gregations are always seeking for a young man ; be- 
cause he can live, in a way that will be creditable to 
them, for half the money which it will cost a man with 
a family. Young men are, however, inclined to insist 
on the same salary that the church would have to pay 



440 DISTRIBUTION OF PRODUCED WEALTH. 

a man with a family ; and there is no reason why they 
should not receive it. 

What those interested think one ought to have, and 
the cost of living in the station required, has more in- 
fluence in fixing the reward of labor in other callings 
than the political economist often imagines. In some 
kinds of labor it makes no difference, as a matter of 
business, to the employer how or where a workman 
lives, or how he appears ; but a salesman must dress 
and live in a certain way, and his salary must be high 
enough to cover the cost of living. In conclusion, we 
may say that the share of labor which satisfies wants 
directly is determined by exchange ; and that competi- 
tion, combination, monopoly, custom, public sentiment, 
and the cost of living in a way which the service 
makes necessary, all have their influence. 



CHAPTEE X. 

THE BOOTY OF THE EOBBEE, AND THE WINNINGS 
OF THE GAMBLEE. 

If during the process of production or distribution, 
before the product reaches the consumer, a robber or 
thief succeeds in making way with a portion of the 
goods, some other share must be diminished. In the 
case of the robbery of an express company, the rates 
for carriage are intended to cover the risk ; and hence 
the loss is likely to be distributed. 

Open seizure of goods is, however, not so common 
as other forms of theft. A few years since, a young 
man with a little money was enabled to buy stock in 
a well-paying railroad. By borrowing money on the 
stock as fast as purchased, and by other devices, he 
soon got a large nominal interest in the road, and had 
himself elected to a position which gave him the prac- 
tical control. He at once proceeded to rob the com- 
pany; and, although detected and put out of office 
before the road had been brought to ruin, he suc- 
ceeded in stealing large sums. This loss probably 
came out of the share of interest and the profits of 
the stockholders. If the rates for transportation were 
raised to help cover the loss, it fell, also, on shippers 
and producers, and through them on labor. Railroad 
wrecking has been common in the United States, and 
many large fortunes have been founded by the sheer 
theft of property. ( 441 ) 



442 DISTRIBUTION OF PRODUCED WEALTH. 

The adulteration of food, and the deception in the 
manufacture of goods, give the largest field of robbery. 
What are called " shoddy goods " are those made to 
deceive the ignorant buyer. They do not satisfy his 
wants as well as he had a right to expect ; "and all the 
profit the manufacturer, or dealer, has made by the 
deception is so much stolen. In most cases it seems 
to be stolen from the consumer ; but the consumer is 
probably a producer, or at least a laborer, and the 
final return for his labor is the goods he gets. If 
these goods are less satisfactory than he would have 
received through an honest dealer, his share of the 
world's product is so much less. 

The swindler does not usually make as much as the 
others lose, because the manufacture of " shoddy " 
goods is not economical, and it costs something to 
make what is of no utility. It costs something to 
deceive the purchaser. The robber also causes actual 
destruction. A gang of sheep-thieves once invaded 
the field of a farmer and killed a number of sheep for 
the pelts, which they took off and made way with. 
The pelts would not bring fifty cents apiece, while 
the sheep were worth four times as much. The 
thieves had, therefore, destroyed four times as much 
property as they got. It is usually true, both in pro- 
duction and distribution, that the booty of the robber 
or swindler takes far more from the other shares than 
he himself receives. It would be cheaper for society 
to support him in idleness. 

It is not necessary to stop to investigate the various 
methods of swindling, or theft and robbery ; but no 



THE ROBBER AND THE GAMBLER. 443 

treatment of " Distribution " would be complete with- 
out calling attention to the vast quantities of the 
world's products which are stolen outright, and to the 
diminished shares of other persons on account of the 
dishonest methods of manufacture and trade. 

The booty of the robber is frequently disguised un- 
der the claim of " profits "; and it is sometimes im- 
possible for the public to know whether receipts are 
profits, or the result of swindling. If the swindle is 
not detected, the gain of the swindler is likely to pass 
for profits. 

It is well understood that gamblers can not live off: 
each other. They must win from men who are en- 
gaged in other business, although what one thus wins 
may be passed back and forth among his class. Gam- 
blers produce nothing ; they do nothing to satisfy 
wants. They must be supported by the labor of 
others ; and their support often costs the modest in- 
come of a good many families. The Louisiana lot- 
tery has made great fortunes for its owners, while the 
expenses of its management have been wasted. A 
great many millions of dollars are actually taken from 
the other shares of production by direct gambling, such 
as lotteries, races and gambling-houses. We may next 
add to this the gambling of the boards of trade in 
the leading cities. Not that there is no honest and 
necessary business conducted there ; but that it is gen- 
erally recognized that mere betting on future prices of 
grain and stocks equals or exceeds the legitimate 
transactions. How much of the purchase of stocks by 
outside parties may properly be classed with gam- 



444 DISTRIBUTION OF PRODUCED WEALTH. 

bling, it is impossible to say. All business contains an 
element of risk ; but the risk of mining, of raising a 
crop of wheat, or of manufacturing, is in no sense to 
be classed with gambling, as it is sometimes done by 
unthinking persons. Gambling is getting money as 
distinguished from making money; and though few 
men have gotten rich by playing cards, the number of 
great fortunes founded on other forms of gambling 
is larger than is usually supposed. Gamblers waste 
more money than they save. 



CHAPTER XI. 

THE SHARE OF THE GOVERNMENT. 

The share of the annual production of a country 
which falls to the government consists chiefly in what 
it takes by taxation. The cost of government must 
be met in some way, and in return for the benefits 
conferred it takes the cost of its maintenance. A 
civilized government, such as the United States, is 
worth more to any individual than it ever takes from 
him, under even a bad system of taxation ; but this 
gives it no right to take more than is absolutely neces- 
sary for the maintenance of the service it furnishes. 
Government may be regarded as a great co-operative 
institution whose cost must be paid by the members, 
and whose benefits are shared among them. It should 
not unnecessarily trespass on the freedom or the in- 
come of the individual. 

A distinction should be made between the expenses 
of government proper and the cost of carrying on any 
business in which the government may be engaged. 
Among the former may be mentioned : the cost of the 
national defense ; legislative, judicial and executive 
departments ; the public school system ; asylums for 
the insane, the blind and the deaf ; and hospitals for 
the poor and unfortunate. All these and other ex- 
penses are borne with no expectation of return. 

The second class comprises all government business 
(445) 



446 DISTRIBUTION OF PRODUCED WEALTH. 

enterprises, which, should ordinarily pay their own 
way, and in some instances a profit. The government 
should seldom or never undertake any business which 
is not a natural monopoly. The expenses of such 
business should never be charged as government ex- 
penses, and the receipts should not be entered as gov- 
ernment income. The accounts of each business en- 
terprise should be kept separate, and only its profit 
and loss entered among the goverment expenses. If 
the post-office does not pay expenses, the small loss 
should appear in government reports as a necessary 
expense of maintaining such a convenience for the 
people. The people should understand how much 
they are paying for law and order, and how much for 
loss on business enterprises. This method of book- 
keeping would reduce the nominal national expenses, 
and prevent much confusion. It would also make ex- 
travagance more difficult. It is true that in the 
United States there is some separation of accounts at 
present by which a book-keeper can get at the facts ; 
but the expenses of the post-office should not even 
appear in the general government statement — only 
the net loss. 

The method by which government revenue shall be 
raised forms the general subject of taxation, which is 
a question of practical statemanship based on the 
principles of economics. However interesting and 
important such a subject may be, its consideration 
here would carry us too far from the purposes of this 
volume. The object of this chapter is to call atten- 
tion to the share of the government, without discuss- 



THE SHARE OF THE GOVERNMENT. <*47 

nig methods of levying it or the other shares from 
which it may be taken 

Government Property. — The government, as the 
natural trustee for the people, has in its keeping a 
large part of the Resources for the Satisfaction of 
Wants. It is the trustee for all that the people hold 
in common — the air, the water of lakes and rivers, 
the highways and public parks, buildings for public 
schools, all public institutions, buildings for the use 
of government officers, ships and arms for national 
defense, etc. Every one must be free to run his 
steamboat over government waters under the same re- 
strictions. The streets of a city and the highways of 
the country are parts of the land which is recognized 
as government property. So also are public parks. 
The name " Boston Common " has become known all 
over the United States, and calls to mind the New 
England idea of reserved common wealth. Any in* 
come from the rent of such property is, of course, a 
part of the general share of the government. 



INDEX. 



Accumulation of permanent 
wealth, 262. 

Adulterations of food, 442. 

Atmosphere, the, 26. 

Bank credits, 346. 

Ballot, 191. 

Bellamy, Edward, 152. 

Bequest, right of, 186. 

Bimetallism, 333. 

Book accounts, 336. 

Booty of robber, 441. 

Buildings, 38. 

" Business," 378. 

Capital, 242. 

Capitalization, of good name, 
379 ; of monopolies, 393. 

Child labor, 221. 

Chinese, 140. 

City, proper density of popula- 
tion, 70 ; model city, 253. 

Combination, 288. 

Competition, 287, 383 ; weakness 
of, 299. 

Confiscation of property invested 
in the resources of nature must 
not be permitted, 166. 

Control of Society, 189. 

Co-operation, 412 ; constant em- 
ployment under, 208 ; would 
not abolish the wages class, 417. 

Consumable Wealth, 261, 364. 



Consumable Natural Wealth, 2i>. 

Consumable Produced Wealth, 
364. 

Copyright, 182. 

Cost of production, 296 ; to the 
laborer, 303. 

Credit, 339 ; bank credits, 346 ; 
how credits save the use of 
money, 345. 

Crime, influence on population, 
130 ; criminals, 252. 

Currency, see Money. 

Danger of immigration, 142. 

Deferred marriages, effect of, 126. 

Deferred payments, 316. 

Demand, 290. 

Dense population, advantage of, 
362. 

Diminishing returns, 78. 

Discovery of Resources of Na- 
ture, 68. 

Desire and want compared, 17. 

Division of labor, 214, 110. 

Distribution of Produced Wealth, 
Book VI., 351 ; how distribu- 
tion takes place, 352 ; primary 
and secondary, 353. 

Economical use of resources, 201 ; 
of Labor, 203; of Nature, 
225; of Produced Wealth, 242. 

Economy, definition of, 9. 



(449 ) 



450 



INDEX. 



Emigration, 113, 135. 

Exchange, Book V., 271 ; bene- 
ficial to both parties under the 
circumstances, 275; cost of, 
273; difficulty of, 270 ; distin- 
guished from production, 273 ; 
exchange value, 277, 280 ; how 
exchanges satisfy wants, 271. 

Exchange Values, 277, 280; limits 
of are fixed by value in use, 
285 ; not the cost of produc- 
tion, 284. 

Famine, 124. 

Farm or Factory, 82. 

Fish, 28, 233, 235, 240. 

Finished goods, 42. 

Financial panics, effect of, 207. 

Forces of nature, 27 ; discovery 
of, 68. 

Forests, 28, 239. 

Forestry, 239. 

Gambling, 443. 

George, Henry, mistakes of, 178, 
366. 

Geometrical progression, 118, 
131. 

Good luck, 400. 

Good name, share of, 375. 

"Good will," share of, 378. 

Government, 445 ; may require 
land to be brought into use as 
fast as needed, 228. 

Government land, 176. 

How to build a city, 227. 

Immigration, 113 ; refusal to per- 
mit, 137. 

Improvements on Land, 40. 

Inheritance, of wants, 14 ; of 
property, 185. 



Interest, 363 ; an inducement to 
save, 370 ; usually reckoned on 
money, 374. 

Interstate commerce law, 386. 

Irish land tenure, 179. 

Irrigation, 210. 

Labor, 32 ; a changing force, 34 ; 
child labor, 223 ; consumers of 
direct, 259 ; constant employ- 
ment of, 203 ; definition of, 32 ; 
development of, 221; difference 
in laborers, 89 ; division of, 
214; advantage of, 215; how 
far should it be carried? 217; 
tends to belittle the laborer, 
219 ; direction of determined 
by employer, 258 ; hours of, 
211 ; irksomeness of , 209 ; labor 
power depends on ability rather 
than on the number of the peo- 
ple, 35 ; ownership and control 
6f, 160; prohibition of certain 
forms, 223 ; purposes for which 
it shall be used, 257; relation 
to population, 87; satisfies 
wants directly or indirectly, 36; 
satisfies wants directly, 260, 
267 ; unemployed, 205 ; use in 
satisfying wants directly, 260 ; 
utility of, 53 ; value of, 92 ; 
value to laborer, 93 ; wasted 
labor, 209; when a drug in 
the market, 88 ; woman's labor, 
224. 

Laborer, costof living, 205 ; gold- 
en age, 431 ; improvement in 
condition of, 212, 430 ; labor- 
ers the purchasers, 206 ; must 
live, 206. 



INDEX. 



451 



Laborer's ownership of himself, 
160; reasons for, 160; appar- 
ent exceptions, 161. 

Laborers, proportion to idlers, 90. 

Land, 22 ; for residence, 22, 70 ; 
factories, 23, 76 ; agriculture, 
24, 77 ; government control of, 
228; improvements on, 40; 
practical methods of use, 172; 
quality for residence, 70 ; for 
factories, 76 ; for agriculture, 
77 ; speculation in, 227 ; value 
of, 169. 

Land Laws of Moses, 168. 

Laissez faire, 195, 196. 

Law. of increase of population, 
116. 

Liberty, desire for, 160. 

Limit to natural resources, 69. 

Limiting production, 295. 

Limits of Exchange Value, 285. 

Long and short haul clause, 386. 

Machinery, limited use, 244. 

Malthus, 116, 118. 

Marriages, deferred, 126. 

Materials, 43. 

Merchants, share of, 418. 

Minerals, 28. 

Mill, John Stuart, on Socialism, 
156; proposed plans of dealing 
with land, 178. 

Money, 312 ; durability, 322 ; fiat, 
327 ; gold, 325 ; how to secure 
uniform value, 330 ; increase 
in value, 318; paper money, 
324, 326 ; portability, 312 ; 
qualities of good, 313 ; silver, 
321 ; value of, 326; substitutes 
for, 335; tabular standard, 



331 ; what determines value of, 
325. 

Monopoly (see also natural mo- 
nopoly), 306,382; capitalization 
of, 393 ; effect on price, 307 ; 
share of, 382. 

Monopolist, price he will fix, 308. 

Morality by legislation, 254. 

Moses, land laws of, 168. 

Natural wealth (see Resources of 
Nature), definition of, 30 31. 

Natural monopolies, 194, 382- 
396 ; government control of, 
387 ; not Socialism, 391. 

Needs and wants compared, 17. 

Non-competing groups of labor- 
ers, 428. 

Not right to satisfy all wants, 17. 

Ownership and control of re- 
sources, 151 ; of labor, 160 ; of 
resources of nature, 165 ; of 
resources produced by indus- 
try, 181. 

Opening of new employments to 
women, effect on population, 
127. 

Overcrowding of population, 123. 

Paper money increases value of 
gold and silver, 327. 

Parks, 238; reservation of, 180. 

Penn, Wm., and the Indians, 184. 

People the purchasers, 206. 

Permanent natural resources, 225. 

Permanent Wealth, 262-266, 363. 

Personal interest in scientific 
study, 165. 

Poor laws, effect on increase of 
population, 129. 

Population, Book II., 65 ; appli- 



452 



INDEX. 



cations of laws, 135 ; assumed 
to double in 25 years, 118; 
checks to increase of, 120 ; in 
the United States, 142; classes 
who should people a country, 
138; effect of education on, 
147; law of increase of, 116; 
number of people per square 
mile in cities, 70 ; population 
and labor, 87 ; population and 
society, 103 ; population and 
Produced Wealth, 96 ; popula- 
tion and Resources of Nature, 
60; room for increase of, 139 ; 
stationary, 133 ; tendency to 
rapid increase fortunate, 122. 

Population and Labor, 87. 

Population and Produced Wealth, 
96. 

Population and the Resources of 
Nature, 66. 

Population and Society, 103. 

Practical business, 251. 

Price, 281. 

Price of a dollar, 275. 

Profit sharing, 434. 

Profitsof production, 397; limited 
by competition, 403. 

Profits of exchange, 406 ; gross 
and real profit, 408. 

Private Property, natural right 
of, 151 ; what resources may 
become, 157. 

Private Property or Socialism, 
151. 

Produced Wealth (see resources 
produced by human industry), 
consumable, 364 ; definition of, 
45 ; economical use of, 242 ; 
how much needed, 96 ; perma- 



nent and consumable, 244 ; per- 
manent use of, 363 ; saving of, 
101 ; utility of, 52; value of, 
100 ; what fixes share of, 366. 

Producers and Non-Producers, 
36 

Productions of Human Industry, 
38 (see Resources Produced 
by Human Industry). 

Produced Wealth, 45. 

Production of consumable goods, 
261. 

Profits, definition of, 404, 410; 
consist of two elements 400. 

Profits of Exchange, 406, 408. 

Profits of Production, 397. 

Profit Sharing, 434. 

Prohibition of certain forms of 
labor, 221. 

Property, 153, 182 ; disposition 
of after death, 185 ; moral 
right of, 182 ; natural right of, 
153 ; not robbery, 185 ; what 
resources may become, 157. 

Public opinion, effect on marri- 
ages, 128. 

Purposes for which labor shall be 
used, 257. 

Purposes for which resources 
shall be used, 256. 

Purposes for which permanent 
Produced Wealth shall be used, 
243. 

Railroads, 387-389. 

Rent, 175, 355; does not depend 
on public or private ownership, 
357 ; how rent may be reduced, 
361. 

Resources for Satisfaction of 
Wants, Book I., 21. 



INDEX. 



453 



Resources of Nature, 21 ; can not 
be increased, 66 ; classification, 
28, 30; consumable, use of, 231; 
discovery of, 66 ; economical 
use of, 69; how many people 
will they support ? 70 ; limited, 
69 ; must be separated from 
those produced by industry, 
166 ; ownership and control of, 
165; permanent and consum- 
able, 29 ; Permanent, 225 ; 
practical methods of using, 172; 
public use of, 236-241 ; public 
and private use of, 234 ; satisfy 
wants directly and indirectly, 
30 ; use of inferior, 226 ; used 
by private parties, 235 , by the 
State, 235 ; utility of, 51 ; value 
of, 84. 

Resources produced by human in- 
dustry, 38 (see Produced 
Wealth) ; economical use of, 
242 ; how much needed, 96 ; 
ownership and control of, 181 ; 
population and, 96 ; utility of, 
52 ; value of, 100. 

Right of property, 154, 181, 182; 
what it includes, 183. 

Rights, of children, 161 ; crimi- 
nals, 162; idiots and insane, 
162; paupers, 162. 

Risk in production, 399. 

Roads, 39. 

Sale and purchase simpler than 
barter, 278. 

Savings, 101, 247, 250. 

Share of good name, 375 ; of the 
government, 445 ; of laborer 
who works for himself, 411 ; of 
laborer who works for wages, 



420 ; of laborer who satisfies 
wants directly, 436; of the 
merchant, 406 ; of monopoly, 
382 ; of Natural Wealth, 355 ; 
of Producer, 397 ; of Produced 
Wealth, 363. 

Society, 46 ; a million people 
compared with more, 106 ; cori- 
. trol of, 1S9 ; definition of, 46; 
depends on the wants and char- 
acter of the people rather than 
their number, 105; limit to the 
number of people desired, 107; 
negative utility, 55 ; popula- 
tion and, 103; satisfies wants 
by its presence, 104 ; satisfies 
wants directly, 46 ; indirectly, 
47, 106; utility of, 54; use in 
satisfying wants, 252 ; value of, 
109. 

Socialism, 151, 193 ; danger of, 
182; definition of, 151, 193; 
distinguished from other or- 
ganizations of society, 193; 
destruction of independence, 
157 ; not a means of saving 
society, 156 ; private property 
and, 151 ; slavery to society, 
157. 

Substitutes for money, 335. 

Suffrage, who should have the 
privilege of, 190. 

Sunday work, waste work, 213. 

Supply and demand, 289, 297. 

Support of workmen, 207. 

" Survival of the fittest," mistake 
in popular conception of mean- 
ing of the term, 139. 

Swamps brought into use late, 
229. 



454 



INDEX. 



Taxes, 1(33. 

Telephone exchange, 278. 

Timber, 28. 232. 

Title by exchange, 184. 

Tools and machinery, 39. 

Total demand, 290. 

Total supply, 289. 

Use of Resources, 201. 

Use of the resource of society, 
252. 

Utility, 49 ; Jevon's view, 49. 

Unchangeable value of money, 
desirability of, 313. 

Undertaker, 354, 398, 400. 

Value in use, 49, 57 ; decreases 
with quantity, 60; means scar- 
city, 57 ; measure of, 59 ; shows 
relation between wants and re- 
sources, 65 ; of Resources of 
Nature, 84. 

Value of money, 283. 

Values of a dollar, 282. 

Visible supply, 293. 



Wages, 420; depend on supply 
and demand, 421 ; effect in 
raising prices, 424 ; nominal 
and real. 424 ; principles on 
which high wages depend, 432; 
when high, 432 ; why increase 
in has not been greater, 430. 

Wages system, 420j unfortunate, 
432. 

Wants, 10 ; all should not be 
satisfied, 17 ; creation, develop- 
ment and suppression of, 11 ; 
spiritual and religious, 15. 

Wants and Resources, relation 
between, 65, 95. 

War, 120. 

Water, 25. 

Wealth, 1 ; natural, 31 ; pro- 
duced, 45. 

What shall be produced ? 256. 

Who shall people this land? 138. 

Wholesale and retail, 301. 

Wild animals, 28. 

Woman suffrage, 192. 



